Techs to Open Lower on Dell

Elena
09 May, 2006
New York City

Stock futures pointed to a flat start Tuesday ahead of Fed Reserve''s decision on interest rate increases on Wednesday. The U.S. central bank is expected to raise its benchmark interest rate to 5%, but investors will be focused on clues about the future direction of rates. Computer giant Dell dropped 6.4% before the opening bell as the company issued lowered profit guidance. General Motors Corp. climbed 2.2% before the bell as the automaker revised its Q1 results to show a profit.

[R]9:00 AM Stock futures indicated a flat market opening.[/R]
U.S. stock futures were sitting near the unchanged mark, pointing to a flat start of Tuesday session ahead of FOMC meeting and interest rate decision on Wednesday. The U.S. central bank is expected to raise its benchmark interest rate to 5% on Wednesday, but investors will be mainly looking for clues about the future direction of rates. In addition, lowered earnings guidance from Dell generated negative sentiment, threatening to hurt tech stocks. Computer giant Dell ((DELL)) dropped 6.4% before the opening bell as quarterly profit fell short of the company''s forecast. At the same time, analysts at Robert W. Baird & Co. lowered their rating on the company to neutral from outperform. In other corporate news, General Motors Corp. ((GM)) climbed 2.2% before the bell as the automaker revised its Q1 results to show a profit. Sara Lee Corp. ((SLE)), the maker of deli meat, baked goods and household products, posted lower quarterly profit. Cisco Systems Inc. ((CSCO)) and Walt Disney Co. ((DIS)) are due to release their earnings after the market closes. Standard & Poor''s 500 futures were up 0.50 point, slightly below fair value. Dow Jones industrial average futures were up 1 point, and Nasdaq 100 futures were unchanged.

Crude oil prices steadied, following the developments in the international standoff with Iran. Light sweet crude June delivery lost 4 cents to $69.73 a barrel. London Brent added 12 cents to $70.33. European gold advanced on weaker dollar and higher oil prices. In London the precious metal rose to $679.75 per troy ounce, up from $677. In Zurich gold gained to $679.60, up from $675.90. Silver opened at $14.30, up from $13.90. The U.S. dollar was mixed in European trading. The euro traded at $1.2692, down from $1.2704. The dollar bought 111.58, down from 111.69 yen. The British pound was quoted at $1.8550, down from $1.8569.

Lazard Ltd, ((LAZ)), financial advisory services provider, reported Q1 adjusted net income advanced 68% to 51 cents a share, from 31 cents a share in the year-earlier period. Operating revenue rose 32% on financial advisory and asset management business growth. The company''s income from continuing operations declined 75.5%, reflecting differences in reporting payments for services rendered by managing directors, tax provisions and minority interest expense. The company beat analysts’ forecasts for earnings of 47 cents a share.

Western Gas Resources, ((WGR)), natural gas company, reported Q1 earnings of 81 cents a share, up from a profit of 26 cents a share a year-ago on revenue growth, topping analyst estimate for a profit of 74 cents a share.

Kos Pharmaceuticals, ((KOSP)), pharmaceutical company, reversed to a loss of 6 cents a share in Q1, hurt by inventory management agreements and stock option expenses despite 11% revenue growth. If not for those agreements and expenses, it would have earned 28 cents a share, still short of the 62 cents a share earned in the year-earlier period. The company missed analysts’ expectations for a loss of 4 cents a share.

Watson Pharmaceuticals Inc, ((WPI)), generic drug maker, reported that its Q1 net income dropped to 23 cents a share, from 32 cents a share in the year-ago period despite 2% net revenue growth, helped by higher generic product sales, but offset by lower brand product sales. The company missed analysts’ forecasts for earnings of 32 cents a share.


[R]8:15AM European markets gained ground at mid-day.[/R]
European markets advanced at mid-day, lifted by gains in the telecommunications and automotive sectors which helped offset weakness among technology stocks. Shares of Vodafone Group rose 3.2% on a report that U.S. Verizon Communications offered to buy out Vodafone''s 45% stake in Verizon Wireless for $38 B. Automakers Renault and BMW rose each 3%, following a brokerage upgrade on General Motors. Among tech stocks, microchip maker Infineon Technologies and STMicroelectronics declined after computer giant Dell cut its profit outlook. Merger-and-acquisition deals provided some support with steelmaker Arcelor rising 2.3% on speculations that Mittal will raise its offer.. The German DAX 30 added 0.2%, the French CAC 40 rose 0.4%, and London FTSE 100 climbed 0.6%.


[R]7:45AM Asia closed largely lower. China Shanghai Composite surged.[/R]
Asian-Pacific benchmarks finished broadly lower, reflecting currency jitters, profit taking and cautiousness ahead of U.S. Fed Reserve’s decision on interest rates Wednesday. However, China Shanghai Composite jumped 2.3%, extending Monday’s rally on improved demand for Chinese shares. Brokerage Citic Securities rose by the 10% daily limit on news that it plans to issue 500 million new shares to Chinese institutional investors. Across the region, the Nikkei slipped 0.6% to 17,190.90 as weaker dollar weighed on exporter issues, threatening to hurt overseas earnings. Export-related high-tech component maker Kyocera fell 2.3%, followed by optics and electronics giant Canon, which dropped 1.4%. In currency markets the dollar bought 111.65 yen. Hong Kong’s Hang Seng slid 1%, dragged down by real-estate issues and energy stocks. Taiwan weighted index slipped 1.1%, Singapore Straits Times lost 1.1%, while Australia’s All Ordinaries inched up 0.05%, helped by the country’s top logistics firm, Toll Holdings, up 6.42%.