Cisco Powers Tech Rally

123jump.com Staff
08 Feb, 2006
New York City

It was a day of optimism. Falling oil price, better than expected earnings from Communication equipment leader Cisco and strong rise in same-store sales from McDonalds kept market in the plus column for the day. General Motors stock fell 4% on analyst downgrade to,sell, and lowered price target to $17 from $22. After-the-close, Whole Foods reported earnings of 40 cents vs. 36 cents a year ago on revenue growth of 22%. It was the ninth straight quarter of double digit earnings growth.

U.S. MARKET AVERAGES

In the end broader averages closed in the plus.

Market at least for today paid attention to the brighter side of earnings report from Cisco, communication equipment leader. Cisco reported better than what market was expecting and that set positive momentum in the early hours which lasted till the end of the day.

Volatile oil was again at top of trader’s list of worries. Weekly petroleum report from Energy Department confirmed that inventories for oil and distillate fell slightly but remained at the sufficient level and gasoline inventory rose by 4.3 million barrels. At close crude oil, gasoline and heating oil declined by a fraction.

While tech, pharmaceutical, railroads, specialty retailer stocks rallied during the day and oil, natural gas and coal stocks declined during the session.


MOVERS AND SHAKERS

Lazard Ltd ((LAZ)) reported Q4 pro forma net income of $57.3 million, or 57 cents a share, up 56% from $36.6 million, or 37 cents a share, in the year-ago period, beating estimates of 49 cents a share. Operating income rose 7% to $77.1 million. Total revenue fell to $392 million from $401 million. Operating revenue fell 2% to $388 million. The stock rose 8.2%.

Mesa Air Group Inc ((MESA)) reported January traffic increase of 10.6% to 500 million revenue passenger miles from 452 million miles in the same period a year earlier. Load factor was 68.3% for the month. The stock gained 3.7%.

Nuance Communications ((NUAN)) agreed to buy Dictaphone Corp. for $357 million in cash. Nuance expects the acquisition to add between $80 million and $85 million in revenue in fiscal 2006 and between $180 million and $200 million in revenue in 2007. The acquisition is also expected to dilute GAAP earnings by around 11 to 12 cents a share 2006 and by 2 to 5 cents in 2007. The company’s shares gained 1.6%.

The New York Times ((NYT)) posted January advertising revenue rise of 3.4% to $198 million and total company revenue rise of 3.2% to $300 million. However, excluding the acquired in March 2005 About.com, advertising revenues decreased 0.3% and total company revenues increased 0.7%. The company also said it''ll start printing its National edition in Houston as part of an expansion of home delivery and retail distribution to readers in the metropolitan Houston area and southeastern Texas. The stock gained nearly 1%.

Cheesecake Factory ((CAKE)), restaurant chain, reported Q4 net earnings rise of $23.4 million, or 29 cents a share, compared with $19.9 million, or 25 cents a share a year ago. The company posted revenue of $328.3 million vs. $266.1 million, missing analyst estimates of a revenue of $330 million. The stock fell 4.2%.

Dean Foods ((DF)), food and beverage company, reported Q4 earnings from continuing operations of $70.7 million, or 49 cents a share, down from a profit of $85.2 million, or 55 cents a share a year ago. On an adjusted basis, excluding certain charges, the company earned 54 cents a share. Sales rose 4% in the latest three months to $2.69 billion from $2.6 billion in the same period a year ago. The average estimate was for a profit of 54 cents a share on revenue of $2.64 billion. Dean Foods projected Q1 adjusted earnings of 39 to 41 cents a share and reaffirmed its outlook for earnings of $2.20 to $2.25 a share for the full year on sales of about $10.5 billion. The company’s shares lost 2.1%.

ECONOMIC NEWS

Crude oil inventories ticked down in the latest week, according to government statistics released Wednesday, giving back a fraction of the previous week''s gain. Meanwhile, stocks of gasoline recorded another sharp rise.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories fell by 300,000 barrels for the week ended February 3, dropping to 320.7 million barrels from the prior week''s level of 321.0 million barrels. This followed a gain of 1.9 million barrels in the previous week. Oil inventories were 10.7% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 4.3 million barrels, the government said, adding to a recent string of gains that included the previous week''s build of 4.2 million barrels. Gasoline stocks were 1.7% above their levels of last year. Inventories of distillate fuel oil ticked down by 300,000 barrels in the most recent week.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished deeply in the red with investors cautious amid disappointing Japanese earnings and weakness on Wall Street. The Nikkei tumbled 2.68% with Morgan Stanley cut its outlook on Japan after recent equities gains. South Korea’s Kospi dropped 1.6%, Taiwan’s Weighted index slipped 1.4%, and Hong Kong’s Hang Seng fell 0.9%. The sole gainer among regional markets was Shanghai Composite, up 0.25%.

European stocks closed down on weak resource stocks, hurt by lower commodity prices. However, support was provided by mergers and acquisitions, as well as strong earnings from GlaxoSmithKline. The German DAX 30 lost 0.1%, the French CAC 40 dropped 0.8%, and London’s FTSE 100 fell 0.4%.

OIL, METALS, CURRENCIES

Crude oil prices slipped below $63 a barrel on larger-than-expected gasoline stocks increase. Light sweet crude for March delivery fell 54 cents to $62.55 a barrel. London Brent dipped 53 cents to $61.03.

European gold prices declined. In London gold fell to $550 bid per troy ounce, down from $555.90. In Zurich the precious metal traded at $551.10, down from $556.50. In Hong Kong gold fell $20.50 to close at $556.50. Silver closed at $9.40, down from $9.45. In New York gold fell $1 to $553.80 per ounce.

The U.S. dollar gained strength against most other major currencies. The euro was quoted at $1.1949, down from $1.1969. The dollar bought 118.45 yen, up from $118.15. The British pound stood at $1.7413, down from $1.7449.

EARNINGS NEWS

Lazard Ltd, ((LAZ)), financial advisory services provider, reported Q4 pro forma net income of 57 cents a share, up 56% vs. 37 cents a share in the same time the prior year, beating analyst estimate of 49 cents a share. The figures assume full exchange of exchangeable interests. Operating income increased 7%. Revenue dropped to $392 million from $401 million.

XTO Energy Inc, ((XTO)), oil and natural gas producer, reported Q4 net income more than doubled to $1.22, up from 50 cents a share in the year-ago period on 95.8% revenue growth as average gas prices rose 71% to $9.09 per thousand cubic feet. Analysts were expecting earnings of $1.10 a share and revenue of $1.13 billion.

Adams Respiratory Therapeutics, Inc, ((ARXT)), maker of Mucinex cough medicine, reported Q2 net income of 29 cents a share, reversing from a year-ago loss of $10 a share, topping analyst estimate of 27 cents a share. The company announced that net sales rose 75%.

GlaxoSmithKline, ((GSK)), pharmaceutical products manufacturer, reported Q4 earnings advanced 45% to 19.6 pence a share on 8% revenue growth. Its 2005 earnings of 82p a share on revenue of 21.66 billion pounds each topped analyst forecasts. For 2006, the company expects earnings per share to rise around 10% at constant currencies and expects to file for approval for its Cervarix cervical cancer vaccine before the end of the year in the U.S. and in Europe in the next few weeks.

McDonald''s Corp, ((MCD)), fast food company, reported that worldwide January same-store sales advanced 5.7% compared with year-ago levels on 9.7% growth in the U.S., a 3.3% rise in the Asia/Pacific, Middle East and Africa region and a 0.5% fall in Europe. On a system-wide basis, sales rose 4.2%.

Cache Inc, ((CACH)), women''s apparel retailer, reported Q4 earnings of 47 cents a share, up from a profit of 39 cents a share a year-ago, beating analyst estimate by a penny. Sales inched 0.9% up. The company forecast Q1 earnings of 12 to 14 cents a share, including a penny per share in stock option expense, with sales projected between $62 million and $64 million.

Dean Foods, ((DF)), food and beverage company, reported Q4 earnings from continuing operations of 49 cents a share, down from an equivalent profit of 55 cents a share a year-earlier. If not for certain charges, the company earned 54 cents a share in Q4, in line with analyst estimate. Sales advanced 4%.

Nu Skin Enterprises, ((NUS)), personal care products company, reported Q4 earnings of 22 cents a share, down from 31 cents a share in the same period last year on 5% revenue decline due to currency fluctuations, beating analysts’ expectations by a penny.

Gerdau Ameristeel Corp, ((GNA)), steel maker, reported Q4 net income of 26 cents a share, up from 23 cents a share in the year-ago period on sales growth, beating analyst projections for earnings of 20 cents a share.

Wisconsin Energy, ((WEC)), electricity company, reported Q4 earnings from continuing operations of 77 cents a share, up from earnings from continuing operations of 71 cents a share in the year-earlier period on revenue growth, beating analyst estimate of 71 cents a share.