Tech Earnings Dominate Trading

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

For the most part market ignored the rise in core PPI as reported by the government. Rise in oil price and mixed earnings in the tech sector dominated stock-specific trading. Reinsurer, PXRE Group tumbled 65% on higher charges related to Hurricane Katrnina. Global markets, especially markets in Japan, India declined by 2% and 1%. European markets closed higher, near four year high. European miners led rally across the region. Markets in Brazil and Canada lead averages higher in the Americas.

U.S. MARKET AVERAGES

Market took a breather today.

It was a day when earnings news dominated the economic data from the government. Earnings from Dell ((DELL)) and Intuit ((INTU)) failed to excite the market despite both companies exceeding the best estimates. It was the weaker guidance for the current quarter that disappointed the market.

However, earnings news from Nvidia ((NVDA)) and current quarter forecast that cheered the investors. There was other negative news for the tech stocks. Investors reacted negatively to the news that Dell did not comment on details of the possibility of deal with semiconductor maker Advanced Micro Devices ((AMD)) driving its stock lower.

Guess Inc ((GES)), Whole Foods Market ((WFMI)), Constellation Brands ((STZ)) and home builder stocks topped the list of decliners for the day.

Oil rose 2% as fears of oil installation attacks in Nigeria rose.

MOVERS AND SHAKERS

Red Robin Gourmet Burgers Inc ((RRGB)), restaurant chain, reported Q4 net income declined 2.9% to $5.5 million, or 33 cents a share from $5.7 million, or 34 cents, in the year-earlier period. Revenue rose 19% to $116.5 million. Same-restaurant sales rose 2.7%. The stock jumped 10%.

PXRE Croup ((PXT)), reinsurer, lost almost two-thirds of their value Friday morning after the company reported huge costs related to recent hurricanes and its credit rating was cut. The company estimated net income of $758 million to $788 million before taxes in 2005, up from a previous estimate of between $462 million and $477 million.

Silicon Image ((SIMG)) swung to profit in Q4, reporting net income of $12.6 million, or 15 cents a share, compared with a loss of $80,000, or break-even per share a year ago. Adjusted net was 16 cents exceeding estimates of 15 cents. Revenue advanced to $61.4 million, compared with $46.1 million, above expectations of $60 million. The stock dropped 15.7%.

Guess ((GES)) shares fell 7.2% after analysts voiced concern about the company''s forecast for fiscal 2006. Brean Murray lowered its rating on the stock to accumulate from strong buy.

ECONOMIC NEWS

The Department of Labor released its report on producer prices in the month of January on Friday, showing that prices rose in line with economist estimates. At the same time, the report showed a bigger than expected increase in core prices.

The Labor Dept. said that its producer price index rose 0.3 percent in January following a 0.6 percent increase in December. Economists had been expecting the index to increase by about 0.3 percent.

The relatively modest increase in prices came as energy prices were unchanged in January after surging up by 2.0 percent in December. Food prices edged up by 0.2 percent in January following a 0.8 percent increase in the previous month.

The report also showed that core prices, which exclude food and energy prices, rose 0.4 percent in January after edging up by 0.1 percent in each of the two previous months. The increase marked the biggest rise in core prices in a year and exceeded economist estimates of 0.2 percent growth.

The bigger than expected increase in core prices may raise some concerns about inflation and the possibility of further interest rate hikes by the Federal Reserve. Subsequently, traders are likely to keep a close eye on next week''s report on January consumer prices.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks ended Friday session mixed. The Nikkei sharply dropped 330 points, or 2.06%, despite higher-than-expected GDP growth. Across the region South Korea’s Kospi climbed 1.4%, Hong Kong’s Hang Seng gained 0.2%, while the Bombay Stock Exchange’s Sensitive index suffered a steep decline of 1.13%.

European stocks closed at a new four-and-a-half year high on gains for miners and automakers, while the U.K.’s Daily Mail & General Trust tumbled after backtracking on selloff plans. The German DAX 30 added 0.1%, the French CAC 40 rose 0.5%, and London’s FTSE 100 gained 0.3%.

OIL, METALS, CURRENCIES

Crude oil prices advanced on concerns over Iran and prospects of shortage in gasoline supplies when the U.S. driving season begins. Light sweet crude for March delivery rose $1.44 to $59.88 a barrel. London Brent climbed $1.01 to $59.80. Gasoline added 9 cents, heating oil rose 3 cents and natural gas rose 4 cents at close in New York.

European gold prices recovered from recent declines. In London gold traded at the fixed price of $552.40 bid per troy ounce, up from $540.80. In Zurich the precious metal traded at $553.90, up from $539.30. In Hong Kong gold rose $4.70 to close at $544.70. Silver closed at 9.43, up from $9.25. In New York gold rose $5.80 and closed at $554.60 per ounce.

The U.S. dollar turned mixed against most other major currencies. The euro traded at $1.1932, up from $1.1893. The dollar bought 118.35 yen, up from 117.74. The British pound stood at $1.7412, up from $1.7395.

EARNINGS NEWS

Talk America Holdings Inc, ((TALK)), communications services provider, reported Q4 earnings of 7 cents a share, down from a profit of 40 cents a share a year-ago on revenue decline.The company expects EBITDA of $13 million to $15 million, aside from stock option expense.

Sierra Pacific Resources Inc, ((SRP)), electric energy company, reported Q4 earnings of 11 cents a share, down from an equivalent profit of 15 cents a share a year-ago, topping views of 7 cents a share.

[Telus Corp, ((TU)), telecom company, reported Q4 net income Friday of 22 cents a share, down from 38 cents a share in the year-ago period. Charges of about 24 cents a share hurt Telus Q4 net earnings. Revenue advanced by 6.2% to C$2.09 billion from C$1.96 billion.

Dell, ((DELL)), computer producer, reported Q4 net income of 43 cents a share, up from 26 cents a share in the year-ago period on 13% revenue growth, even though desktop PC sales were unsatisfactory, topping analyst views of 41 cents a share. The increase was a reflection of strong demand for Dell''s laptops, software and peripheral computer products.

Zale Corp, ((ZLC)), jewelry retailer, reported Q2 earnings of $1.78 a share, down from a profit of $1.91 a share a year-ago. If not for items, such as restructuring costs related to its closing of certain Bailey Banks & Biddle locations and a tax benefit from the repatriation of foreign earnings, the company reported a profit of $1.96 a share. Revenue advanced 2.3%. The analysts’ estimates were for a profit of $1.91 a share in Q2.

Sirius Satellite Radio, ((SIRI)), media firm, reported a Q4 loss of 23 cents a share, slightly down from a loss of 21 cents a share in the year-ago quarter despite revenue growth, missing by a penny analyst estimate of a loss of 22 cents. Subscriptions advanced 190% and the company expects six million subscribers by the end of 2006.

RadioShack Corp, ((RSH)), home electronics retailer, posted a decline in Q4 net income of 36 cents a share, down from 81 cents a share in the year-earlier period due to weakness in wireless sales and lower sales in its high-margin categories. Excluding an accounting change Q4 of 2005 earnings per share was 38 cents, missing analysts’ forecasts of 67 cents a share. As part of a restructuring plan, RadioShack will replace old, slower-moving merchandise with new, faster- moving merchandise within higher growth categories. Closure of 400 to 700 company-operated stores and expand its kiosk business is envisaged.

American Pharmaceutical Partners, ((APPX)), producer of injectable pharmaceutical products, reported Q4 net income of 32 cents a share, up 7% from 30 cents a share in the year-earlier quarter on 18% revenue growth, missing analysts’ expectations of 35 cents a share.

J.M. Smucker Co, ((SJM)), jelly maker, reported that Q3 net income shed 13.3% to 54 cents a share due to 2.5% sales decline. Adjusted earnings from continuing operations before restructuring costs came to 68 cents a share, down vs. 70 cents, missing analyst estimate of 73 cents.

Hewlett-Packard Co., ((HPQ)), computer and printer maker, reported a 30% jump in profit to 42 cents a share, up from 32 cents a share a year-ago and a nearly 6% increase in revenue for its Q1 on cost cutting and enhanced profit and sales across its portfolio of businesses. If not for amortization and other items, the company would have reported net income of 48 cents a share, topping expectations of 44 cents.