Techs Weaken on Microsoft

Elena
22 Mar, 2006
New York City

Tech futures declined on news that Microsoft will delay the release of its Vista operating system, sending shares of memory chip and computer makers down. In earnings news, Morgan Stanley reported earnings rise for Q1 of $1.54 per share on revenues of $8.48 billion, beating expectations. Apparel retailer Nike posted 19% profit increase in Q3 on sales growth, beating estimates.

9:15AM Tech futures declined, dragged by Microsoft.
U.S. technology futures pointed to a lower start as Microsoft Corp. ((MSFT)) announced decision to delay the release of its new operating system, sending memory chip and computer makers stocks down. Shares of the world's largest software maker dropped 2% before the opening bell. S&P 500 and Dow industrials futures pointed to a flat to slightly higher start, supported by General Motors ((GM)) which rose 2.3% on report that the company was about to announce an early retirement deal for workers in connection with the UAW. In earnings news, Morgan Stanley ((MS)) reported a higher Q1 profit on record revenue, while FedEx Corp. ((FDX)) posted a higher quarterly profit and raised its full-year profit forecast.

Crude oil prices retreated ahead of petroleum report on expectations of strong U.S. oil inventories. Light sweet crude April delivery fell 18 cents to $62.16 a barrel. London Brent for April delivery lost 3 cents to $62.10 a barrel. European gold extended losses. In London gold declined to $548.50, down from $549.70. In Zurich the precious metal fell to $548.20 from $549.30. In Hong Kong gold fell 40 cents to $552.40. Silver traded at $10, down from 10.20. The U.S. dollar advanced against other major currencies. The euro traded at $1.2071, down from $1.2098. The dollar bought 117.16 yen, up from 117.10. The British pound was quoted at $1.7473, down from $1.7477.

Interpublic Group Cos, ((IPG)), advertising corporation, reported a Q4 loss of 8 cents a share, reversing from a profit of 25 cents a share in the year-ago quarter on revenue decline to $1.9 billion from $1.97 billion a year ago.

Actuant Corp, ((ATU)), maker of tools and motion control systems, reported Q2 earnings of 63 cents a share, up from a profit of 52 cents a share a year-ago on 17% sales growth, ahead of analyst estimate for earnings of 62 cents a share.

FedEx Corp, ((FDX)), package delivery company, reported Q3 net income $1.38 a share, up from $1.03 a share in the same period last year on 9% revenue growth, beating analysts’ forecast of $1.30 a share.

Morgan Stanley, ((MS)), financial advisory services company, reported Q1 net income soared 17% to $1.54 a share a share, up from $1.35 a share a year ago, as its institutional securities, fixed income and hedge fund servicing businesses all produced 24% revenue growth, topping analysts’ estimate for earnings of $1.21 a share.

Nike, ((NKE)), apparel and shoe marketer, reported Q3 earnings of $1.24 a share, a 19% rise from the year-ago period on sales growth, topping analyst forecasts of $1.10 a share.

Sigma Designs Inc, ((SIGM)), maker of digital media processors for consumer appliances, reported Q4 net income was 2 cents a share, up from the same period last year when the company was breakeven on a per-share basis. The company added that quarterly revenue came to $10.5 million, up from $7.89 million in the same period a year ago.

Shuffle Master Inc, ((SHFL)), gambling equipment company, reported Q4 results, including a 31% rise in revenue. Shares were up 17% at $30.75 in morning trading, after soaring to $30.77 earlier in the session, its highest point in more than a year. Bear Stearns upgraded Shuffle Master’s rating to outperform.

GameStop Corp, ((GME)), video game and entertainment software retailer, reported Q4 net income of $1.10 a share, almost double than a year-ago profit of 64 cents a share. The company added that Q4 earnings include merger-related expenses of 2 cents a share. Sales surged to $1.67 billion from $708.7 million a year ago, owing in large part to the contribution in sales from its recently-acquired Electronics Boutique stores. Same-store sales for Q4 dropped 0.3%. The company beat analyst estimate for earnings of $1.08 a share.

Spectrum Control Inc, ((SPEC)), maker of electronic control products and systems, reported Q1 net earnings of 2 cents a share, down vs. 5 cents a share in the year-earlier period. Revenue at the company advanced to $25.6 million from $21.1 million. The company predicted Q2 earnings of more than 10 cents a share, on condition that it achieves expected sales of $30 million to $31 million.


9:00AM Sensex index in Mumbai lost 0.5% on general weakness in Asia.
India’s Sensex index dropped more than one point at mid-day but recovered to close at 63 points lower. Asian markets sharp sell-off cautioned foreign investors from more adding capital to the market. Sensex rose from 10,000 to 11,000 in 29 days and rose from 9,000 to 10,000 in 48 days of trading. The market’s rapid ascent has cautioned many domestic and international investors. However, domestic mutual funds industry has raised additional $4 billion in the last one month that has still not been put to the market. Reliance mutual funds raised more than $1.3 billion for a new group of funds.

Late surge in select stocks such as Tata Motors, Dr. Reddy’s, Hindustan Lever and Satyam Computer supported market recovery. Dr. Reddy’s jumped 10% on news that the company is in talks with Sanofi-Aventis and Bristol Meyers to settle drug patent disputes. Tata Motors gained 1.6% on recent restriction on maximum tonnage imposed by Supreme Court. Higher freight rates for road transportation and strong demand for trucks have raised hopes for better earnings. Hindustan Lever and Satyam Computers rose 1.7% and 1.4%.


8:30 AM European averages lost ground at mid-day.
European markets traded mostly in the negative at mid-day dealings with market sentiment hurt by further worries that interest rate will be soon increased. However, strong pharmaceutical, media and auto stocks limited the downward trend. Automakers Volkswagen and BMW gained on lower euro and retreating oil. Sanofi-Aventis, Astra Zaneca and GlaxoSmithKline were among advancers. The German DAX 30 fell 0.2%, the French CAC 40 dropped 0.4%, while London FTSE 100 edged up 0.02%


8:00AM Interest-rate concerns dragged Asian markets down.
Asian-Pacific benchmarks finished Wednesday session with heavy losses, reflecting interest-rate concerns and weakness in the tech sector, following news that Microsoft will postpone the release of its Windows operating system until next year. The biggest loser was South Korea’s Kospi which plunged 2% on heavy sell-off among tech stocks, including Samsung Electronics and Hynix Semiconductor. The Nikkei dropped 0.8% to 16,495.48 with Nippon Steel limiting losses with an advance of 1.3% on expectations of higher steel demand. Hong Kong also posted a sharp decline, falling 1.8%, followed by Taiwan Weighted index, down 1%, while Australia’s All Ordinaries gained 0.4%.