From Briefing.com: The week started on a sour note for the tech sector as it fell prone to a low volume sell-off that was precipitated by a lack of any stirring catalysts, the continued backup in interest rates, a disconcerting outlook from Lexmark International (LXK 59.40 -14.10), an unconvincing SEMI book-to-bill report, and a general sense that the market is ripe for a period of consolidation as we head into the typically slow dog days of summer.
The lackluster showing was consistent with Briefing.com's cautious view heading into the week, and by and large, there was nothing on Monday that would prompt us to change that cautious, short-term stance. Sure, stock prices are lower and the Nasdaq is down 5.3% from its July 14 high, but further work needs to be done to work off the excesses that were built up in the latest tech rally.
From a technical vantage point, there was further deterioration on Monday as the Nasdaq violated the June trading range top in the 1686/1684 area with a close at 1681.41. As noted above, though, the sell-off occurred on low volume. Accordingly, the recent retreat is still considered as being part of the normal ebb and flow of a healthy market advance; and, as we have previously indicated, it will take a violation of the bottom end of the June trading range (1597/1598) on decisive volume before we suggest a sea-change in sentiment has taken place.
After Monday's close, Corning (GLW 7.51 -0.13), Novellus Systems (NVLS 34.55 -1.15) and Texas Instruments (TXN 17.88 -0.81) each reported their results for the June quarter. There were few surprises in that each company either met or surpassed consensus expectations. The guidance from these companies was mixed for the most part, but strikingly, there was an optimistic tone on business prospects in the commentary by management in either the press release or on the conference call. That may not drive a sharp rebound in the tech sector over the near-term, but again, it provides fodder for bulls to view dips as a buying opportunity.
Amazon.com (AMZN 35.33 +0.35) will be a focal point on Tuesday as it is slated to report its Q2 results after the close. The Reuters Research consensus revenue and EPS estimates stand at $1.02 bln and $0.06, respectively.
For further detail on earnings news, be sure to visit Briefing.com's In Play, Earnings Calendar, and Guidance pages.--- Patrick J. O'Hare, Briefing.com
6:30PM Monday After Hours price changes vs 4pm ET levels: Following a disappointing session for the cash market, which closed down 1.0-1.6%, the tone in the after-hours session is a bit more encouraging. Presently, the S&P futures are trading 0.3 points above the fair value of 978, while the Nasdaq futures are one point above the fair value of 1242.
Technology is King and earnings reports from tech companies are certainly dominating the scene. Texas Instruments (TXN 18.46 +0.58), designer and manufacturer of semiconductor products, reported Q2 (Jun) earnings of $0.07 per share, $0.01 better than the Reuters Research consensus of $0.06. Revenues rose 11.0% year/year to $2.40 bln, above the consensus of $2.30 bln. Going forward, the company expects Q3 EPS of $0.06-0.10, excluding $0.13 per share contribution from the company's previously announced sale of 24.7 mln shares of Micron Technology's (MU 14.02 +0.01) common stock, but including $45 mln in restructuring charges. The guidance appears to be comparable to the Q3 consensus of $0.11, as analysts' estimates for Q2 included restructuring charges.
Altera (00C0 18.51 +0.06), designer, manufacturer, and marketer of programmable logic devices, reported in-line earnings of $0.09 per share for Q2 (Jun) on revenues of $205.3 mln, which were above the consensus of $201.8 mln and up 14.7% year/year. The reported revenue was also above the guidance provided on June 3rd, which called for a range of $200.8-202.8 mln versus the consensus of $200.3 mln at the time.
Another in-line report came from Novellus Systems (NVLS 34.95 +0.40), which develops, manufactures, sells and supports systems used in the fabrication of integrated circuits. Specifically, NVLS reported Q2 earnings of $0.05 per share on revenues of $239.1 mln, which were above the consensus of $237.3 mln and up 7.7% year/year. According to CEO, Richard Hill, the company is cautiously optimistic that bookings will increase in Q3 as the company is seeing a rebound in the PC industry and parts of the telecommunications industry. On the conference call, management guided Q3 (Sept) revenues below the consensus estimate of $233 mln to $220 mln.
Another designer, manufacturer, and marketer of integrated circuits to report earnings this afternoon was Silicon Labs (SLAB 33.62 +1.33), which checked in with Q2 (Jun) earnings of $0.24 per share, $0.03 better than the consensus. Revenues of $69.1 mln were above the consensus of $67.0 and up a whopping 67.7% year/year. Looking to Q3 (Sept), the company forecasted EPS of $0.21-0.24 on $71-74 mln in sales versus the consensus of EPS of $0.22 and revenues of $70.4 mln. Separately, the company announces that Dan Artusi will assume the role of the CEO at the end of FY03, replacing Nav Sooch who will continue in his role as Chairman of the Board of Directors.
Another big winner in the after-hours session is JDA Software Group (JDAS 14.80 +2.40), provider of software solutions, which reported Q2 (Jun) earnings of $0.09 per share, $0.06 above the consensus. JDAS's revenues of $53.0 mln were well above the consensus of $44.6 mln, but shaped up for an 8% decline year/year. Additionally, the company announced a sampling of the companies that signed JDA Portfolio(R) contracts in second quarter 2003, including the likes of Dollar Tree Stores ($2.3 bln), Booker Cash and Carry ($5 bln), Telstra Corp ($11.3 bln) and The Bombay Company ($494 mln).
For added detail on these, and other developments, be sure to visit Briefing.com's In Play, Earnings Calendar, and Guidance pages. -- Victoria Glikin, Briefing.com
5:06PM Novellus sees Q3 gross margins improving on a sequential basis (NVLS) 34.55 -1.15: -- Update -- On call, NVLS expects Q3 gross margins to improve to the "45% range" from Q2's 44.1% level.. NVLS up by $0.45 to $35.00 in after hours.
4:59PM Novellus explains lower than expected Q3 revenue forecast (NVLS) 34.55 -1.15: -- Update -- On call, NVLS credits the sequential drop in revenues to a shift in product mix to Japan... The latter compounds the SAFB101 clause, and will "extend" the lag effect for sales realizations by 60-90 days, and into Q4 (Dec) for some sales.
4:53PM Novellus guides revenues below consensus estimates (NVLS) 34.55 -1.15: -- Update -- On call, NVLS sees Q3 (Sept) bookings of $220 mln, shipments of $210 mln, and revenues of $220 mln -- the latter falls below the Reuters Research consensus estimate of $232.9 mln... As for profititability, NVLS expects to be breakeven in Q3, which may include charges... The consensus estimate stands at $0.05.
4:43PM On call, Novellus says Q3 profits will be down, and revenues will be 'down significantly' (NVLS) 34.55 -1.15: -- Update -- More details to follow...
4:11PM Novellus matches consensus (NVLS) 34.55 -1.15: Reports Q2 earnings of $0.05 per share, in line with the Reuters Research consensus. Revs rose 7.7% year/year to $239.1 mln vs the $237.3 mln consensus. "Japan bookings for the quarter were a bright spot. We are cautiously optimistic that bookings will increase in the third quarter as we are seeing a rebound in the PC industry and parts of the telecommunications industry."
4:39PM Texas Instruments beats by $0.01, guides (TXN) 17.88 -0.81: Reports Q2 (Jun) earnings of $0.07 per share, $0.01 better than the Reuters Research consensus of $0.06; revenues rose 11.0% year/year to $2.40 bln vs the $2.30 bln consensus. Company sees Q3 EPS of $0.06-0.10, excluding a $0.13 gain from the sale of MU stock, but including $45 mln in restructuring charges. Guidance of $0.06-0.10 appears comparable to Reuters Q3 consensus of $0.11, as analysts' estimates for Q2 included restructuring charges.
4:27PM GlobeSpan Virata beats by $0.01 (GSPN) 8.96 -0.40: Reports Q2 (Jun) earnings of $0.05 per share ex-items, $0.01 better than the Reuters Research consensus of $0.04; revenues rose 61.9% year/year to $74.4 mln vs the $73.6 mln consensus.
4:19PM Altera reports in-line results (ALTR) 18.45 -0.35: Reports Q2 (Jun) earnings of $0.09 per share, in line with the Reuters Research consensus of $0.09; revenues rose 14.7% year/year to $205.3 mln vs the $201.8 mln consensus.
4:13PM Sanmina-SCI reports in line with consensus (SANM) 7.39: Reports Q3 (Jun) earnings of $0.01 per share, in line with the Reuters Research consensus of $0.01; revenues rose 1.2% year/year to $2.65 bln vs the $2.64 bln consensus. The co is guiding Q4:FY03 cash earnings (excl. charges) of $0.01 to $0.03 per share and revs in the range of $2.6 billion to $2.75 billion.
4:13PM Silicon Labs beats by 3 cents, guides above consensus (SLAB) 32.20 +0.01: Reports Q2 (Jun) earnings of $0.24 per share, $0.03 better than the Reuters Research consensus of $0.21; revenues rose 67.7% year/year to $69.1 mln vs the $67.0 mln consensus. Co expects Q3 pro forma EPS of $0.21-$0.24 (GAAP $0.18-$0.21) on $71-$74 mln in sales, vs consensus of $0.22 and $70.4 mln. Co also announces that Dan Artusi will assume the role of CEO at the end of FY03 and Nav Sooch will continue in his role as Chairman of the board of directors.
4:08PM Corning beats by $0.03, ex items, guides Q3 above consensus (GLW) 7.55 -0.09: Reports Q2 (Jun) earnings of $0.02 per share, excluding ($0.04) per share in after-tax charges, $0.03 better than the Reuters Research consensus of ($0.01); revenues fell 9.1% year/year to $752.0 mln vs the $725.4 mln consensus. Co also sees Q3 EPS of $0.01-0.03, vs R.R. consensus of $0.01, and revenues of $740-765 mln vs estimate of $740 mln.
Close Dow -91.46 at 9096.69, S&P -14.52 at 978.80, Nasdaq -27.02 at 1681.48: A set of June quarter reports that failed to live up to investors' augmented expectations took another chunk out of the mid-March rally today... Checkpoint Software (CHKP 16.86 -2.94) merely matched the Reuters Research EPS estimate, while Merck (MRK 59.78 -1.99) and Lexmark (LXK 59.71 -13.79) fell shy of consensus forecasts in their Q2 (June) reports... As a result, traders expressed their frustration over lackluster financial results that did not support the stock's rapid rise by taking the broader market sharply lower... Profit-taking activity was rampant across most industry groups, but particularly concentrated in the software, storage, computer hardware, utility, drug, homebuilding, auto, and communications equipment issues... The latter group was impacted by a CSFB downgrade of Motorola (MOT 8.72 -0.33) to Underperform from Neutral based on its belief that the accelerating phone product life cycle will continue to weigh on MOT's market share... Areas, however, that found a bid in today's otherwise bearish session were the gold and internet shares... The gold stocks soared by 2.8% in response to the price of gold's $3.70 increase to $351.00/oz...
The precious metal's strong move higher was underpinned by the downturn in US equities and the slump in the dollar versus the euro... As for the internet shares, they attracted buying interest following Smith Barney's upgrade of Yahoo! (YHOO 31.05 +1.15) to Outperform from In-line based on its belief that the company's 2H03 expectations are conservative... Finally, today's only economic report - June Leading Indicators - did little to detract from the focus on earnings given that it is compilation of previously released economic reports...
Nonetheless, Leading Indicators indicated expansion for the index for a third month in a row - at 0.1% (consensus of 0.1%) - thanks to strong increases in stock prices and the money supply... Tomorrow, the market will again take its cue from the inflow of June quarter reports, with Texas Instruments (TXN 17.88 -0.81) and Novellus (NVLS 34.55 -1.15) tonight, and Colgate-Palmolive (CL 56.31 +0.01) tomorrow...Nasdaq 100 -1.5%, Russell 2000 -1.6%, SOX -2.0%, S&P Midcap 400 -1.2%, NYSE Adv/Dec 828/2455, Nasdaq Adv/Dec 1055/2066
3:40PM Novellus Earnings Preview (NVLS) 34.57 -1.13: Novellus reports its Q2 after the close with Reuters Research consensus estimates of $0.05 per share and revenues of $237.3 mln. In Goldman's preview, the analyst best exemplifies the expectations on the street by stating "expect no upside to Novellus' Q2 orders" and goes on to suggest guidance of 10% for Q3. In addition, the potential retirement of its synthetic lease could lead to EPS reductions with no change to cash flow. CSFB believes the co will perform in line with its mid-quarter update with a 210 basis point sequential decline being modeled in to gross margins to reflect lower shipment levels and higher warranty expenses. Analysts are less concerned with Q2 and more focused on whether some semblance of a recovery will be self evident in management's tone on the call and guidance for Q3.
9:37AM Yahoo! (YHOO) 30.60 +0.70: Smith Barney Citigroup upgrades In-line to OUTPERFORM. Target $33 to $38. Believes expectations for YHOO's 2H03 results are conservative and sees Overture buy as an important strategic move to help propel growth.
9:36AM Cymer (CYMI) 33.14 -1.87: Lehman Brothers downgrades Overweight to EQUAL-WEIGHT. Target $37 to $30. Cites valuation as well as belief that investors may not have factored in potentially weak 2H03 orders and profits.
9:34AM Motorola (MOT) 8.78 -0.27: CSFB downgrades Neutral to UNDERPERFORM . Target $7 to $7. Believes that accelerating phone product life cycle will continue to weigh on MOT's mkt share and/or operating margins.
U.S. stocks advanced, led by technology and telecom shares. Predictions for higher sales from companies such as Texas Instruments and Corning, along with an upgrade of semiconductor equipment from Lehman Brothers, bolstered confidence that profits will rise. Stocks erased early losses after the sons of ousted Iraqi President Saddam Hussein were killed in a gun battle with U.S. soldiers in the northern Iraqi city of Mosul. The S&P 500 climbed 9 points (+1.0%) to 988 after falling as much as 0.3 percent. Computer-related shares accounted for a third of the gain and nine of the index's 10 industry groups advanced. The DJIA jumped 61 points (+0.7%) to 9158. The Nasdaq Composite , which gets 41 percent of its value from technology shares, rose 24 points (+1.5%) to 1706. Traders said the market's drop over the past week was luring bargain-hunters, and the Standard & Poor's 500 Index's ability to hold above the technically significant 975 mark gave investors further confidence. Wall Street remains focused on earnings at the height of quarterly reporting season. After bidding up stocks for the past four months, investors are scrutinizing companies' results and outlooks for signs an economic upswing is firmly under way.
Top Stories . . . U.S. Treasuries rose in New York trading as a monthlong rout that brought 10-year note yields to their highest level since December buoyed the appeal of government debt.
Lehman Brothers, the fourth-biggest securities firm by capital, agreed to buy asset manager Neuberger Berman for $2.63 billion to compete with bigger rivals in managing money for wealthy clients.
United Parcel Service said second- quarter net income rose to $692 million, or 61 cents a share, from $611 million, or 54 cents.
Colgate-Palmolive, the world's largest toothpaste maker, said second-quarter profit climbed 10 percent, helped by cost cutting and demand for products such as Simply White teeth-whitening gel.
Alcan, the world's second- biggest publicly traded aluminum company, said second-quarter profit from continuing operations fell 67 percent because the rise in the value of the Canadian dollar made sales worth less.
Quotes of Note . . . ``For this market to go much higher from here will take rising earnings expectations as the year goes on,'' John Waterman, CIO Rittenhouse Financial Services. He oversees more than $13 billion and owns shares of Citigroup and Bank of America.
Citigroup CEO Sandy Weill, "My guess is that you're going to see a big increase in merger and acquisition. I would guess that our company will be a part of that because it's been part of our DNA for a very long time."
Gurus . . . Dick McCabe, Chief Technician for Merrill, sees the averages in a corrective phase, that will contain the Dow around the mid-8000 level; it is currently at 9096, while NASDAQ should hold around the mid-1500 level; it is currently at 1681. From there, another pop could develop that would morph into a more extensive late-summer-early-fall decline.
Doug Foreman, manager of TCW Gallileo Aggressive Growth Equity Fund, feels the tech and biotechs are just in their opening phase. He says many survivors look attractive, including Amazon, e-Bay, Maxim Integrated, Xilinx, and Genentech.
Cooling Bay Area Housing . . . California real estate is showing signs of peaking. Mortgage defaults are edging up again after a slight drop in April, according to foreclosure property investment advisory firm Foreclosures.com. Bay Area prices fell 3.2 percent overall year over year, with new homes taking the biggest hit, dropping 18.8 percent.
Financials . . . Countrywide Financial reported earnings of $2.74 per share, up from $1.48 a share in the comparable quarter a year ago. The mortgage and financial services provider said it saw revenue in the period of $1.739 billion vs. $977.43 million. Countrywide pegs 2003 earnings in the range of $13 to $15 a share. The company increased cash dividend to $0.14 per common share for 2nd quarter.
Ameritrade said third fiscal quarter income was $49.9 million, or 12 cents a share vs. 3 cents a share a year ago. Net revenue rose to $188.5 million vs. $100.3 million a year ago. Ameritrade said it opened 93,000 new accounts in the quarter.. The company sees 4th quarter EPS of $0.03-0.11 versus consensus of $0.09. Revenues were $116-195 million versus consensus $168 million.
Prudential started with a Buy at CSFB and $40 target. While its recent acquisition of Skandia's U.S. business should inject more beta into its earnings stream and balance sheet. The firm believes its strong balance sheet, excess capital, and manageable exposure to minimum interest rate guarantees should allow the stock to defend better on the downside than its recent demutualized peers.
Lehman Brothers will acquire Neuberger Berman in a transaction valued at about $2.625 billion as of Tuesday morning. The deal includes $42 million in in-the-money options and less $255 million in net excess cash as of June 30 and excluded 1.6 million unvested restricted shares in employee compensation plans.
Legg Mason increased its quarterly cash dividend by 36 percent, or 4 cents a share, to 15 cents a share.
Golden West reported another excellent quarter, with EPS totaling $1.76, a 22% improvement over a year ago. Results were $0.08 per share better than estimates, reflecting strong portfolio growth, a relatively stable margin, a record level of non-spread income, an stable credit quality. Profitability remains very high (>20% ROE in 2nd quarter) and the balance sheet remains strong. With short-term interest rates remaining low, Golden West has been able to maintain a relatively stable net interest margin over the past several quarters. And although the yield curve flattened modestly during the second quarter, there was not much effect on Golden West. There seems to have been a more significant impact on holders of fixed rate mortgages as their customers are prepaying faster. Despite very high demand for fixed rate mortgages, most of the volume that Golden West is originating (91% in 2nd quarter) continues to be ARMs. And the recent rise in long-term rates has only sustained the attractive spread between fixed rate mortgages and one-year adjustables which should facilitate the company’s ability to continue to originate ARMs. During the second quarter, Golden West grew its portfolio by 3.1%, roughly the same rate or slightly faster than mortgage debt outstanding we believe. Over the last twelve months, GDW’s portfolio has grown by 16%, significantly faster than the market overall. Strong portfolio growth and relatively stable margin have been the major drivers in the resulted in the very strong earnings growth that the company has enjoyed.
Homebuilders . . . Centex reported earnings of $2.26 per share, $0.42 better than the consensus of $1.84. Revenues rose 27.9% year/year to $2.32 billion versus the $2.13 billion consensus. The firm sees 2004 EPS in the range of $10.25-10.75 above consensus of $10.04.
Oil & Gas . . . BJ Services reported a 79 percent jump in second-quarter earnings as revenue increased 24 percent. BJ Services earned $49.5 million, or 31 cents a share, a penny better than the average estimate. A year ago, the company earned $44.8 million, or 28 cents share. The company also sees 4th quarter EPS of $0.39-0.41, versus consensus of $0.39, and 2003 EPS of $1.18-1.20 versus estimate of $1.20.
Tidewater reported net earnings of $18 million, or 32 cents a share, down from 41 cents a share in the year-earlier period, but above the average analyst forecast of 29 cents a share. Revenue for the quarter ending June rose 2.8 percent to $164.8 million, with vessel revenue rising 2.3 percent.
Millennium Chem upgraded at Prudential to Buy from Hold based on valuation. While fundamentals remain weak, they have stabilized and could start improving through the remainder of the year. Price target is $14.
Occidental Petroleum reported net income of $374 million, or 98 cents a share, up from 64 cents a share in the year-earlier period, and above the average analyst estimate of 96 cents a share. Oil and gas earnings rose 51 percent amid higher oil and gas prices and record production of 544,000 barrels of oil per day. Net sales increased 21 percent to $2.27 billion, with oil and gas sales rising 24 percent and chemical sales adding 12 percent.
Ashland reported net income of $70 million, or $1.01 a share, compared to $65 million, or 93 cents per share, in the year-ago period. Ashland's income from continuing operations was $71 million, or $1.03 a share, compared to $61 million, or 87 cents a share, last year. The company fell short of the forecast of $1.10 per share. The Covington, Ky. oil product firm cited high energy costs, a sluggish economy, and poor weather conditions.
Metals . . . Alcan posted a second quarter loss of U.S. $89 million or 28 cents a share after including results from discontinued operations. In the year-ago period, Alcan posted net income of $71 million. Sales rose to $3.468 billion from $3.146 billion a year ago. "Record sales and operating revenues for the quarter were higher relative to both comparable periods largely as a result of the stronger euro and the FlexPac acquisition on April 30, 2003. Increased aluminum shipments and better pricing, primarily in rolled and engineered products, also contributed to the improvement," Alcan said.
Industrial Equipment . . . UBS upgraded Deere to Buy from Neutral to reflect the following factors: 1) the recent deterioration of the corn crop condition reduces the odds of further significant declines in the price of corn, 2) the current farm cycle is in its fifth year of downturn, with the weakest period consisting of the last 4 quarters, 3) easier comps for farm tractors sales in the U.S. in 2nd half 2003, and 4) recent signs of improvement in demand for construction equipment in the U.S.. The firm raised target to $57 from $48.
Defense & Aerospace . . . Rayonier reported earnings of $0.74 per share which was $0.04 better than the consensus of $0.70. Revenues rose 11.3% year/year to $295.9 million versus the $301.6 million consensus. The company sees 3rd quarter earnings "significantly below" 2nd quarter results versus consensus of $0.23.
Rockwell reported earnings of $0.31 per share, excluding tax benefit of $69 million or $0.36 per share, $0.01 better than the consensus of $0.30. Revenues rose 3.8% year/year to $1.03 billion versus the $1.05 billion consensus. The company also reaffirms $1.10, excluding benefit, versus consensus of $1.10.
Transports . . . UPS reported net income of $692 million, or 61 cents a share, up from $611 million, or 54 cents a share in the same period a year ago, and above the average analyst forecast of 59 cents a share. Total revenue rose 7.1 percent to $8.23 billion, topping analyst expectations of $8.12 billion. The package delivery service said U.S. package volume increased 1.2 percent, and international profitability increased more than 150 percent while non-package profits rose 34 percent. Looking ahead, the company expects to earn 58 to 62 cents a share in the same period a year ago, surrounding analyst projections of 60 cents. The company "remains on track to achieve its targeted earnings growth of 10-to-15% for the full year."
Norfolk Southern increased its quarterly dividend by 14 percent, or a penny a share, to 8 cents a share.
Bear Stearns says South West Airlines execution is admirable, but valuation is a bit stretched.
Toyota Motor is raising its global sales forecast for 2003 to 5.85 million, up 60,000 vehicles from its previous projection. The figure represents a 6-percent increase from 2002 levels. Japan's biggest automaker also said in a statement it has increased its global production volume target for this year by 130,000 vehicles to 6 million.
America West said it earned $80 million, or $2.02 a share, in the second quarter with revenue of $579 million. Excluding a $15 million charge for closing a Columbus, Ohio hub and an $81 million government payment, the carrier earned $13 million, or 33 cents a share. In the year-ago quarter, the carrier brought in revenue of $544 million with a loss of 38 cents a share.
Midwest Express reported second-quarter net income of $6.6 million, or 42 cents a share, up from 7 cents a share in the same period a year ago. Excluding a gain from the Emergency Wartime Supplemental Appropriations Act, the loss for the period was 6 cents a share, versus the average analyst loss forecast compiled by Thomson First Call of 24 cents. Total operating revenue fell 16 percent to $96.9 million. The air carrier said that while industry conditions remain seriously challenging due to competitive pricing and continued high fuel prices, the outlook is "significantly improved."
With $71 million in government assistance, Alaska Air Group said it earned $45 million, or $1.70 a share, reversing last year's loss of $2.9 million, or 11 cents a share. Without the $44 million after-tax benefit of that federal help, the airline earned $900,000, or 3 cents. Second-quarter revenue came to $609 million. In the year-ago quarter, Alaska brought in revenue of $576 million.
Southwest generated free cash of $166 million, net of $325 million in capital expenditures and $3.7 million in dividends, which was 1.6x net income. Cash flow from operating activities (excluding special items) totaled $495 million, and included $95 million in depreciation and $136 million in deferred income taxes. Capital expenditures for 2003 and 2004 are expected to be $1.2 billion and $1.7 billion, respectively. Southwest ended the first quarter with just over $2.2 billion in unrestricted cash, up from $1.89 billion at 1st quarter-end and has an unsecured revolving credit line of $575 million. Further, in the face of the tough environment brought on by the war, Southwest generated an increase in net profit excluding exceptional items of 23% to $103mn or $0.13 per share up from $0.10. An encouraging sign was the 1.6% year/year increase in yield (passenger revenue /RPM ex special items). Average passenger fares rose 3.4% to $86.23. At the same time, the load factor expanded 0.2 points to 70.1%. On the call, management indicated that the percentage of full fare paying customers rose 3.3 points to 35% and suggested that this trend is continuing into the summer. This is being driven by the pick up in summer leisure travel as “business” traffic throughout the country does not appear to have gained much traction yet. (It usually lags macro growth by at least a quarter.)
Southwest operating costs excluding special items rose 4.4 % to $1.33 billion on a 4.7% increase in capacity (ASMs) and unit costs rose 0.3% to 7.46 cents. Including the $41 million in profit sharing derived from the $271 million government grant, unit costs increased 2.7% to 7.68 cents. (These unit cost increases come while several of the hub and spoke carriers are experiencing declines in unit costs, albeit off of a high reference point.) At Southwest, labor costs rose 17% year/year and unit labor costs increased 12.4%; however, if you exclude the exceptional profit sharing item, labor costs increased 9% and unit labor costs increased 4.5%. Expect this unit cost pressure to continue into 2nd half 2003, projecting just under a 1% rise in CASM ex fuel.
Education . . . UBS believes that Corinthian Colleges shares could trade down following report of enrollment figures that showed marked deceleration. Although company's June-end same school enrollment growth of 17% was in-line with firm's estimate. UBS notes that its forecast was at the low end of the estimate range, and that this growth may prove disappointing to COCO's growth oriented investors.
Consumer Products . . . Colgate Palmolive said its second quarter earnings per share met Wall Street estimates as all its businesses recorded volume gains. The company earned net income of $359.8 million, or 62 cents per share in the latest quarter, versus $327 million, or 55 cents per share a year ago. Revenues rose to $2.46 billion in the quarter, compared to $2.30 billion a year ago.
Stanley Works citing weaker-than-expected sales, primarily in consumer tools and entry doors, warned it sees third quarter net sales up 4 percent over the year-ago period. Earnings per share for the quarter are expected to be in the range of 39-51 cents and, aside from 12-21 cents of expected charges, in the range of 60-63 cents versus 62 cents last year, it said. For the year, the tool-maker sees earnings around $1.10 a share, with restructuring costs, impairment charges, other exit costs and one-time expenses charges adding to around $1.10 per share. " It further warned that "achievement of the stated objective of a 15 percent operating margin exiting 2003 requires higher sales than expected."
Tupperware reported 2nd quarter earnings of $0.23 per share, excluding $0.01 gain from land development, $0.03 better than the consensus of $0.20. Revenues rose 8.4% year/year to $310.0 million versus consensus of $285 million. The company guided 2003, says "Due to second quarter declines in North America, which are expected to continue throughout the year, partially offset by positive momentum in Europe, full-year expectations are reduced to $1.18-$1.26 per diluted share, including 13 to 16 cents from gains on land development and 10 cents positive impact from foreign currency."
Food & Beverage . . . Wm. Wrigley reported net earnings of $125.9 million, or 56 cents a share, up from $110 million, or 49 cents a share in the same period a year ago as profitability growth in Canada, Europe and the pacific region offset declines in the Americas and Asia. The results matched the average analyst forecast. Global sales increased 12 percent to $792.6 million, topping analyst expectations of $784.1 million.
Restaurant . . . Red Robin started with a Buy at BB&T and $26 target. The firm is saying they view the company as one of casual dining's more attractive investment opportunities, with its 3-5 year 20% annual EPS growth potential, well-differentiated concept, strong customer appeal, and attractive unit economics.
Retail . . . Sales at U.S. retail chain stores rose by 0.3 percent for the week ending July 19, boosted by food, pharmacy and seasonal-goods demand. The BTM/UBSW weekly report said good weather and summer sales helped bring consumers into stores. The weekly sales index made a new high over the last week, and the survey said the numbers are on track to likely be the strongest monthly sales gain since at least April's 3.1 percent Easter-inflated year-over-year rise. June industry same-store sales rose by 2.4 percent on a year-over-year basis.
RadioShack reported net income of $57.5 million, or 34 cents a share, up from 28 cents a share in the same period a year ago, and above the average analyst forecast of 29 cents a share. Revenue rose 3 percent to $1.03 billion, versus analyst estimates of $1.02 billion, and comparable-store sales increased 3 percent. The consumer electronics retailer said strong wireless and toy sales, as well as improved profitability in the computer and power-technical departments, helped drive growth. Looking ahead, the company anticipates third quarter earnings of 27 to 29 cents a share, surrounding analyst forecasts of 28 cents.
Sherwin-Williams reported net income of $110.1 million, or 75 cents a share, versus $107.5 million, or 70 cents a share in the same period a year ago. This was in line with the consensus forecast of Wall Street analysts. Revenue rose 1.3 percent to $1.47 billion. The paint company said 3rd quarter earnings per share would be in a range of 75-85 cents. The company cut its estimate for sales growth in 2003 to 1.5-3.0 percent, down from its previous forecast in April that sales would increase 2.0-3.5 percent.
Healthcare . . . The TriZetto Group reported a second-quarter net loss of $1.36 million, or 3 cents a share, versus a loss of 8 cents a share in the same period a year ago. Pro forma earnings, which exclude acquisition-related expenses, earnings were 4 cents a share, topping the average analyst forecast of 3 cents. Total revenue rose 15 percent to $76.5 million. The healthcare information technology company said that while sales cycles remain at least a year for prospects considering multiple products and services, it was confident that market share will continue grow.
Alcon gets FDA approval for ear infection treatment to market Ciprodex Otic for topical treatment of a middle ear infection known as acute otitis media with tympanostomy tubes in children aged 6 months and older. The FDA also approved Ciprodex Otic for the topical treatment of acute otitis externa ("swimmer's ear") for pediatric, adult, and elderly patients.
HCA Healthcare reported earnings of $0.75 per share, excluding estimated allowance for doubtful accounts of ($0.13) and an asset impairment charge of ($0.15). This was in line with the consensus of $0.75. Revenues rose 11.5% year/year to $5.47 billion versus the $5.48 billion consensus.
Stephens raises their target on Beverly Enterprises to $7 from $4, citing: 1) favorable developments in the Medicare front, 2) the availability of cash to bid on BEV properties is driving prices to as high as $35k/bed, and 3) company seems to have passed its review from AOC without having to significantly increase its patient liability reserves.
Health Management reported fiscal net income of $75.9 million, or 30 cents a share, up from 26 cents a share in the same period a year ago, and in line with the average analyst forecast. Net patient service revenue for the quarter ending June rose 9.2 percent to $647.1 million, boosted by an increase in admissions and improved pricing.
Quest Diagnostics cut to Neutral from Buy at Merrill Lynch. Although earnings power for company remains strong, this is the second qtr in a row that DGX has reduced volume expectations. According to firm, 2nd quarter trends represented a continued deterioration, rather than the stabilization firm had anticipated.
Quest Diagnostics said its net income rose to $120.4 million from $87.2 million a year ago as its testing business grew. Earnings per share rose 29 percent to $1.12 from $0.87 in 2002 and 2 cents ahead of the consensus analyst estimate. Second quarter revenues increased 14 percent over the prior year level to $1.2 billion and reflect the acquisition of Unilab Corporation, which was completed on February 28, 2003. "For the full year 2003, earnings are expected to increase between 24 percent and 27 percent to between $4.00 and $4.10 per diluted share, before charges associated with the Unilab acquisition," the company said.
Laboratory Corp. of America reported net income of$68.4 million, or 60 cents a share, up from 55 cents a share in the same period a year ago, and in line with the average analyst estimate. Revenue rose 22 percent to $743.7 million, just shy of the $754.7 million expected by analysts. The clinical laboratory company said its financial performance was enhanced by its decision to increase its genomic and esoteric testing businesses.
Drugs . . . Sepracor reported a net loss of $33.8 million, or 40 cents a share, versus a loss of $93.8 million, or $1.12 a share in the same period a year ago, and narrower than the average analyst forecast of 60 cents a share. Revenue rose 59 percent to $76.5 million, topping analyst expectations of $67.50 million. The pharmaceutical development company said it had $500 million in cash and cash equivalents at the end of June.
NPS Pharma announces settlement with Forest Labs. NPS had sought a milestone payment of $2 million under a 2000 Development and License Agreement between the companies. In settlement Forest Labs paid NPS $1.525 million.
Punk Ziegel reiterates Buy on Trimeris and $74 target. The firm is citing the strength of the Fuzeon data, on the clear need for new treatment options for patients with HIV, and on the guidance provided by TRMS and Roche regarding capacity and cost of goods. The firm believes that Roche's guidance on manufacturing capacity has been and remains conservative, and that there is likely to be additional upside vs Roche's current guidance and firm's projections.
Millennium Pharmaceuticals said second quarter loss narrowed on rising drug sales, but it was still slightly larger than analysts had expected. The company posted a net loss of 36 cents per share, or $107.1 million, versus a loss of 38 cents, or $107.7 million a year ago. The pro forma loss, which excludes non-recurring items, was 7 cents a share, while analysts had expected the company to lose 17 cents per share. Revenue increased 32 percent to $121.7 million, topping analyst expectations of $107.5 million. For the full year, the company lowered its revenue outlook to $410 million to $420 million from $450 million to $475 million due to an anticipated decline in Integrilin sales and reflects the impact of a recently formed collaboration.
Media . . . Pulitzer reported net income of $11.4 million, or 53 cents per share, compared with $7 million, or 32 cents per share, in the year-ago period. The firm matched the forecast of 53 cents per share. The company said it expects to meet its full-year 2003 profit target of $1.95 per share, but added, "we are facing a stubbornly uncertain advertising market, and achieving that base earnings level will require maintaining our tight focus on cost control."
CNET upped to Outperform at Thomas Weisel based on view that CNET can benefit from both 1) a secular "channel shift" trend from offline to online advertising and 2) a cyclical recovery in its core technology client. Price target goes to $10 from $7.
AOL Time Warner target raised to $21 at Deutsche. The firm says the following near-term factors should lead to increased credibility for mgmt and a narrowing of AOL's valuation discount to the group. The company should reaffirm or raise guidance when they report 2nd quarter results tomorrow, debt paydown should accelerate through announced transactions and free cash flow, and investors should gain confidence in healthy 2004 growth for the company.
Gannett extended the employment contract of Douglas McCorkindale, its chairman, president and chief executive, from June 2004 through July 2006. "I am delighted the Board has asked me to stay on through 2006," McCorkindale said. "This will give me an opportunity to work with our strong management team to complete the important strategic plans we have in place and continue to develop the next level of top management for Gannett."
Omnicom cut to Sector Perform at CIBC on valuation. The downgrade is based on view that potential price appreciation of shares is essentially in line with that of the Broadcasting and Advertising sector. Firm expects OMC shares to appreciate 16% over the next 12 months, slightly below the average expected return of 18% for stocks in the sector. CIBC's top pick is Interpublic with a price target $17.
Metro-Goldwyn-Meyer reported loss of $0.17 per share, excluding a $0.38 charge loss on the sale of its Rainbow Media cable channels. This was $0.06 better than the consensus of ($0.23). Revenues rose 44.8% year/year to $487.7 million versus the $407.3 million consensus.
Hotel & Leisure . . . Harrah's posted earnings per share of 74 cents vs. 77 cents a year ago, a decline of 3.9 percent. Its property EBITDA fell 3.4 percent to $283.6 million from $293.6 million, while revenues rose to $1.08 billion, up 6.9 percent from revenues of $1.01 billion. The company said record results from Southern Nevada and Atlantic City operations helped partially offset the impact of poor weather in Northern Nevada, an April revenue decline tied to the beginning of the war in Iraq and disappointing performances at North Central Region properties.
Argosy Gaming upgraded at Merrill Lynch to Buy from Neutral. The firm is saying the stock's current valuation reflects overly conservative earnings expectations, and earnings revisions are likely to be positive in the near-term; raises 2003-04 estimates above consensus. Price target is $24.
Telecom . . . Goldman Sachs says they would be buying SBC, Verizon, and Bell South ahead of the quarter, which should contain few surprises and further confirmation that conditions aren't worsening and progress is being made, despite a very tough operating environment. In addition, the current weakness is exacerbated by recent bond market weakness (as high dividend paying stocks), the market seems to be discounting information inconsistently, and the Bells are again trading below electrics, which have traditionally represented floor valuations.
EarthLink reported an overall net loss of $15.3 million, or 10 cents a share, versus a loss of 27 cents a share in the same period a year ago. Excluding non-recurring items, net earnings were 7 cents a share. Analysts had been expecting earnings of 3 cents a share, on average. Total revenue rose 5 percent to $352.3 million, just shy of the $357.2 million expected by analysts. Paying subscribers increased 3.7 percent to 5.04 million. Broadband customers increased 64 percent to 993,000 while narrowband customers declined 4.9 percent to 3.9 million. The company sees 3rd quarter revenues of $350 million versus consensus of $361 million, for 2003 sees revenues of $1.4 billion versus consensus is $1.45 billion.
S&P raised Nextel's corporate debt rating from B+ to BB- and rated its current notes offering at B+. The upgrade, as expected, marks a continuation of our de-leveraging theme for NXTL and should lower NXTL's borrowing costs. The current $1 billion offering is slated to re-finance the 10.65% Snr. Redeemable Discount Notes of 2007 and the 11.13% Series E Pfd’s of '10. The weighted average rate for these two issues is 10.82%. Previous analysis highlighting $.23 upside in EPS assumed 264 bp savings in re-financings. This would imply an 8.2% re-financing rate. Watch the coupon rate on the new notes. Estimate every 20 basis points translate into about $.01 in EPS for our overall re-financing analysis.
Telecom/Cable/Satellite . . . Yesterday's trading was dominated by satellite-RBOC marketing agreements, putting pressure on the cable group. While competition may not be getting any easier, the cable plant is fundamentally well positioned to respond aggressively and quickly to the demands of the competitive market. The test will be of marketing, for both cable and RBOC.
SBC signed a co-branding partnership with Echostar's DISH network, and Qwest signed a marketing agreement with both DISH and DirecTV. SBC-DISH partnership is more formidable, as it better leverages SBC's local presence to distribute bundled DISH services. Cox and Charter appear to be most exposed to the SBC-DISH deal, with roughly 45% of their customer bases in
SBC territory; Comcast has lower, but material, exposure with 35% overlap, and Cablevision has only 8% overlap. SBC expects to start offering the service in early 2004, although there is some skepticism as to whether they can make that timetable. The competitive situation could lead to all or some of the following: Further consolidation, faster deployment of new technologies, full digitization of the plant, co-marketing arrangements with wireless providers, acceleration of back-office improvements, and/or "rapprochement" with broadcasters. Cable stocks will mark time over the next few weeks in an environment where satellite and DSL competition may generate headline risk.
IT Services . . . NY Times says two senior IBM officials told their colleagues around the world in a recorded conf call that IBM needed to accelerate its efforts to move white-collar jobs overseas. To stay competitive with offshore providers and to increase the value proposition to customers, this is an inevitable move. IBM is already building staff in India, China and elsewhere to do services tasks. - high end Symm DMX upgrades.
EMS . . . Sanmina reported cash EPS of $0.01, up $0.01 sequentially, but down 50% Year/Year, on rev of $2.65 billion, up 8% sequential and 1% Year/Year. Cash EPS was in-line with First Call consensus and revenue was $20 million or 1% above consensus. Cash EPS was $0.01 below estimates of $0.02, but revenue was $49 million or 2% above $2.60 billion estimate. The $49 million or 2% sales upside was due to the strong ramp of the new IBM xSeries outsourcing
(2 months or over $175 million incremental in the quarter) and 13% Quarter/Quarter increase in Industrial/Medical driven by new outsourcing. SG&A was $3 million above estimates, resulting in EPS being $0.01 below our est. Operating margin of 1.45% rose 39bps Quarter/Quarter but was still slightly below estimates due to higher SG&A. A/R rose $70 million or 4.6%, less than the 8.4% sales increase, causing DSOs to fall 2 days to 53. Despite the ramping IBM program, inventory control was solid as it fell $33 million, and turns rose from 8.6x to 9.4x. As a result, CCC fell 3 days Quarter/Quarter from 45 to 42 days. CFO was $202 million and FCF after capex was $192 million this quarter. Cash rose $176 million to $1.57 billion in the quarter due primarily to FCF generation. Outlook: SANM is guiding Sept up slightly with rev of $2.6-$2.75 billion and EPS of $0.01-$0.03 inline with FC of $0.02. In general, SANM sees more stability in its overall customer base with comm. being flat. Expect Dec quarter to be up 10% overall due to seasonality/IT budget flush. Unexpectedly, SG&A/R&D will rise $4-5 million/quarter (half a penny) due to ODM server initiatives (Newisys acquisition).
Network Equipment . . . Tellabs said it lost $111 million, or 27 cents a share, in the second quarter, down from $218.1 million, or 35 cents, a year ago. Sales fell 32% to $234.1 million from $344.6 million a year earlier, but they rose 5 percent from the prior quarter. Excluding onetime costs stemming from fresh layoffs, the company lost $31 million, or 8 cents. That matched the consensus of analysts.
First Global upgraded Nokia to a "buy," citing a favorable reward versus risk profile. "We have been consistently bearish on Nokia for a long time now, on account of both fundamental and technical factors - and have been proved right," the firm said. "However, now, bang in the current spate of downgrades, we would like to stick our necks out to say that the stock is finally in a buyable range, especially after the recent post-results fall."
Riverstone Networks overstated revenue for fiscal year ended March 2002 by as much as $47.3 million. The data network equipment maker also said it overstated revenue for fiscal year 2003 by as much as $4.2 million. The company said that additional items may be restated as the review continues.
Semiconductor Equipment . . . Lehman raises their sector weighting on the Semi Capital Equipment industry to Positive from Neutral to reflect their view that the “longest and deepest” semi equipment downturn in history is gradually ending, and the secular prospects for the industry and for individual company's are substantially better than is generally believed. Ed White, Jr upgrades Applied Materials, Lam Research, and Novellus to Overweight from Equal-Weight; downgrades Dupont Photomask to Equal-Weight from Overweight and cuts target to $19 from $23 (restructuring may take longer than expected). The firm reiterated Overweight and raises target on KLA-Tencor to $62 from $45; and initiates coverage of FORM with an Overweight rating and $24 target.
Novellus 2nd quarter EPS $.05 on $239 million. $193 million orders was a little less than hoped for. Strong Japan bookings this Quarter. Given slower (60-90 day) order acceptance in Japan expect 3rd quarter revenues at $220 million - down Quarter/Quarter. If improved orders do not materialize as expected, NVLS prepared to cut costs. September order guidance of $220 million (+14%) was encouraging. NVLS talked about building order pressure that they think will result in 2nd half 2003 strength. Reducing 2004E EPS to $.74 from above consensus $.99. Reduced estimates given the $.04/Quarter impact from the unwinding of synthetic leases and modest reduction in rev/margin expectations. At 2.5x BV trading at discount to KLA Tencor & Applied Materials while maintaining a broader product portfolio versus last cycle. Highly leveraged to copper process ramps especially in ECD. Look for opportunities to build positions.
Semiconductors . . . Infineon has "seen (the) first signs of a positive market trend in the last quarter and thus look forward with optimism for a stronger improvement of demand both in our logic segments as well as our memory products segment in the second half of calendar year 2003." The chipmaker plans to continue its cost reduction and restructuring programs. Infineon said it expects further reductions in capital expenditures in the global wireline telecom infrastructure market in 2003, but continues to expect moderate growth in Europe. Infineon said it expects a further positive development of demand for broadband access technology, particularly in Asia. For its Secure Mobile Solutions segment, Infineon said it expects a further moderate increase of demand for GSM/GPRS mobile handsets and Bluetooth products.
Lehman upgraded wireless IC stocks under coverage, citing: 1) a strong unit story for 2nd half 2003, 2) declining inventory levels and increasing demand in Asia following SARS, 3) introduction of new handset models in 2nd half 2003, 3) reasonable valuations, 4) relative underperformance of the group versus the SOX, and 5) achievable earnings forecasts. The firm upgrades Texas Instruments to Overweight from Underweight, RF Micro Devices and Sawtek to Overweight from Equal-Weight, and Anadigics and Triquint to Equal-Weight from Underweight.
Texas Instruments reported 2nd quarter revenue of $2.339 billion, up 6.7% Quarter/Quarter. EPS of $.07 topped estimates by $.01. TXN provided revenue guidance of $2.29-$2.49 billion (growth of -2.1%-6.5%). Project an increase of 2.8%. 3rd quarter EPS estimate of $.20 includes a $.13 benefit from the July 9th sale of 25 million shares of Micron. Wireless declined 5% Quarter/Quarter, which was better than expected because of strength late in the Quarter. At the opposite extreme, broadband grew 44%. DSL accounts for the majority of broadband revenue and projecting modest growth for the remainder of 2003. Trimming estimates on higher restructuring expectations. 2003E EPS to $.44 from $.47 and 2004E EPS to $.64 from $.67. Outlook improves slightly as wireless risk lessens. Texas Instrument's strength in high performance analog (+10% Quarter/Quarter) supports expectation for Linear Tech (reports 7/22) and Analog Devices (reports 8/14). Total analog business increased 5% Quarter/Quarter on strength in consumer audio/video, power mgmt, display drivers, and broadband.
Lattice Semi reported 2nd quarter flat revenue of $58.2 million and in line EPS of $.02. Guiding for revenue to be $52-55 million in September (down 5-10% Quarter/Quarter). Products: CPLD was down 1%, FPGA up 7%. No specific guidance for next Quarter yet. End Markets: Comm up 18%, computing flat, other down 23%. Based on strength seen in FPGA, hopeful there would be some improvement in L-T outlook for the company.
Silicon Labs upgraded at Needham to Buy from Hold following stronger than expected results. With a large number of design wins ramping up, both its Wireless and Wireline units should be well-positioned for robust growth, and the company is expected to introduce many new products over the next 18 months. Target is $36.50.
Altera profit rose on strong demand for its newer semiconductor products. Altera said net income was $36.1 million, 9 cents a share, compared to $21.7 million, or 6 cents, in the year-ago quarter. The 9-cent figure was in line with the average forecast. Revenue rose to $205.3 million -- ahead of the company's projections of $200.9 million to $202.9 million, and up from $178.9 million in the year-ago period. Respondents had anticipated a figure of $201.1 million.
CIBC is maintains Texas Instruments as Neutral following company's report of a penny upside EPS. Firm has concerns over clarity of wireless business: inventory issues in China and increasing competition from chipset suppliers; handset ASPs remain under pressure; Europe remains stagnant. While CIBC likes story long-term, believes more clarity is necessary to justify multiple expansion. UBS is cutting its 2003 estimate to $0.32 from $0.36 following management's reduced guidance for 3rd quarter. Price target goes to $19 from $21. Goldman Sachs says guidance causes firm to continue to wait.
Boxmakers . . . Hewlett-Packard will adopt a "poison pill" provision to ward off unwanted suitors who pursue a hostile takeover. Also announced a new severance policy for senior executives.
Lexmark upgraded at Soundview to Outperform from Neutral based on valuation as well as their view that 3rd quarter guidance was overly conservative and that revenue upside exists. The firm continues to believe that Dell is an incremental positive for LXK, and reiterates that Dell does not drive the pricing environment for hardware and consumables. The firm cuts target to $75 from $78.
Software . . . Deutsche Bank lowered its rating on SAP to hold from buy. "With cost savings harder to find from here and competitors discounting in an unprecedented manner, the story largely rests on economic recovery at present. Without that, near term earnings growth should be low to single digit," the analysts said.
SAP downgraded at Deutsche to Hold from Buy. The firm believes it will be hard for SAP to achieve double-digit EPS growth in 2nd half 2003, heavy discounting means market share gains will be harder to achieve, and much of the investment case now rests on recovery hopes.
Siebel Systems was upgraded at Pacific Growth to Overweight from Equal-Weight based on valuation as well as their belief that the worst news is already in the stock. The firm believes downside risk is -5% to $8.50, while the upside possibility is +22% at $10.90.
Interwoven reported a loss of $0.04 per share, ex items, $0.01 better than the consensus of ($0.05). Revenues fell 20.6% year/year to $26.2 million versus the $25.7 million consensus.
JDA Software reported 2nd quarter 2003 results after the market close last night that exceeded low expectations. While JDAS posted higher than expected license revenue of $15.5 million on particularly strong sales to existing customers (which accounted for 92% of licenses in the quarter), sales to new customers declined to $1.3 million in 2nd quarter 2003, down from $9.5 million in the like quarter last year, and $2.4 million in the previous quarter. Selling more software to existing customers is no doubt a positive, but JDAS will need to reverse the trend in declining new sales to achieve sustainable growth longer term. The expected release mid year 2004 of JDAS applications on Microsoft’s .Net platform could serve as a catalyst for sales to new and existing customers.
Internet . . . FindWhat.com cut to Neutral at First Albany based on valuation, as the stock is trading above their new $22 target (raised from $20).
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