Tech Stocks Fall on TI

Elena
07 Mar, 2006
New York City

U.S. stock futures were sitting below the flat line, hurt by a disappointing guidance from Texas Instruments. The top supplier of mobile phone chips raised the lower end of its profit forecast range but failed to deliver the strong outlook analysts had expected. Citigroup lowered its rating on Qwest Communications International to sell from hold and BellSouth Corp. to hold from buy.

9:00 AM ET - Market Opening

U.S. stock futures pointed to a negative opening, hurt by weakness in tech stocks. A number of technology firms released guidance late Monday, including technology bellwether Texas Instruments Inc which posted a disappointing forecast and raised concerns about the outlook for corporate growth.

Texas Instruments ((TXN)), top supplier of mobile phone chips, lifted the lower end of its profit forecast range but failed to deliver the strong outlook analysts had expected. The stock dropped 3% in shares after hours on Monday.

Fairchild Semiconductor ((FCS)) raised its guidance for Q1. The company expects to increase its revenue by about 9% from previously predicted 5%-7% growth on strong order rates. The company also reported that it has enough demand scheduled to ship within the quarter to achieve its new, higher sales guidance.

Standard & Poor 500 stock index futures fell 3.50 points, or slightly below fair value. Futures on the Dow average were down 29 points and Nasdaq futures slid 4.50 points.

Oil, Metals, Currencies

Crude oil prices advanced ahead of OPEC meeting to discuss output levels. Light sweet crude April delivery gained 24 cents to $62.65 a barrel in electronic trading on the Nymex. Gasoline lost 1 cent to $1.6505, while heating oil was marginally up to $1.7598. Natural gas rose 3 cents to $6.575 per 1,000 cubic feet. London Brent added 43 cents to $62.77.

European gold prices further declined. In London gold fell to $555.25 bid per troy ounce, down from $565.10. In Zurich the precious metal fell to $555.40 from $565. In Hong Kong gold dropped $13.20 to $554.60. Silver opened at $10 per troy ounce, down from $10.20.

The U.S. dollar advanced against other major currencies. The euro traded at $1.1909, down from $1.2017. The dollar bought 117.84 yen, up from 117.54. The British pound was quoted at $1.7363, down from $1.7491.

Earnings News

Per-Se Technologies, ((PSTI)), provider of healthcare technology products, reported Q4 earnings of 34 cents a share, down from a profit of $1.11 a share a year-ago. On an adjusted basis, the company reported earnings from continuing operations of 27 cents a share in Q4. The adjusted results exclude expenses related to the NDCHealth acquisition and a tax benefit. The analysts estimate was for a profit of 29 cents a share.

Finlay Enterprises, ((FNLY)), retailer of fine jewelry products, reported Q4 net income of $3.11 a share, up 2% from $3.02 a share in the year-earlier period. If not for charges, net income advanced to $3.25 a share from $2.94 a share. Revenue grew 10.7% to $421.4 million.

The Sports Authority Inc, ((TSA)), sporting goods retailer, reported Q4 earnings of $1.10 a share, up from a year-earlier profit of 96 cents a share. Sales advanced in Q4 to $741.1 million from $713.8 million in the same period a year ago and same-store sales advanced 2.4%. The analysts’ estimate was for a profit of $1.08 a share. The company attributed the improved earnings to strong sales of active and outdoor apparel, fitness and team sports products, as well as improved gross margins and continued expense controls.

Dick's Sporting Goods Inc, ((DKS)), sporting-goods retailer, reported that Q4 net income advanced 28% to $1 a share, up from 79 cents a year earlier, topping analysts’ estimate of 98 cents a share. Sales for Q4 rose 8% to $849.5 million, while same-store sales advanced 4.1%.

8:30 AM ET - European Markets Mid-day

European stocks traded lower at mid-day dealings, hurt by sharp U.S. markets losses and weak resource stocks including BHP Billiton, down 3.7% and Rio Tinto, down 3%. However, the automaker Volkswagen AG bucked the lower trend, rising 1.1%. The German DAX 30 lost 0.8%, the French CAC 40 dropped 0.7%, and London FTSE 100 slipped 0.9%.

8:00 AM ET - Asian Markets Close

Asian-Pacific benchmarks finished in the red, reflecting weak close on Wall Street and cautiousness ahead of Bank of Japan’s meeting on Wednesday. The Nikkei slipped 1.1% on speculations the BOJ could tighten its ultra-easy monetary policy.

Semiconductor-linked stocks declined on disappointing earnings from U.S. technology company Texas Instruments. Chip maker Elpida Memory fell 6%. Softbank slid 8.5% on reports that the Internet service company is in deal talks with British mobile-phone operator Vodafone.

South Korea’s Kospi tumbled 2.1%, China Shanghai Composite plunged 2.3% on profit taking by institutional investors, Hong Kong’s Hang Seng fell 1.3%, and Taiwan Weighted index dropped 1.2% on weakness in banking and tech stocks.