Thursday's Winners & Losers: Southern California Edison, Varian Medical, Corning, Tollgrade

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Earnings/revenue Analyst actions Offerings/stock actions Miscellany

Last night, one of the biggest items in the news had nothing at all to do with earnings. You can expect a bit of a hullabaloo about JDS Uniphase(JDSU) and SDL(SDLI) Thursday. The two companies are apparently still waiting for the Justice Department to give the all-clear and have again pushed back the expected closing date of their merger.

The networking companies said they have submitted a proposal to the Justice Department to remedy antitrust concerns over their planned merger and now expect to complete the transaction in February. JDS said it wouldn't release the details of the proposal until the Justice Department signs off but will disclose the offer in regulatory filings before shareholders meet to vote on the merger, which has been rescheduled for Feb. 12.

Wednesday night, Salomon Smith Barney came out with a downgrade to outperform from buy, citing concerns about demand for optical components. The firm noted that Lucent(LU) said it would manage inventory levels down by September and that Corning's(GLW) postclose earnings release reinforces the inventory issue.

SDL said Wednesday its fourth-quarter earnings were better than expected, driven by strong growth in product shipments.

Nevertheless, shares of SDL and JDS were hit hard in after-hours trading on news the effective date of the merger was pushed back to meet U.S. Justice Department concerns. JDS Uniphase closed down $8, or 12.7%, to $55.06; SDL closed down $32.94, or 14.2%, to $199.19; Lucent closed down $1.63, or 8.3%, to $18 and Corning ended the day down $13.88, or 19.8%, to $56.25.

Earnings/revenue reports and previews

More! More! More! Earnings for everyone:

American Home Products Meets Expectations; Sets Huge Fen-Phen Charge

Baxter International Meets Estimates, Say Strong Euro Would Help 2001

Celera Genomics Tops Estimates as Revenues More Than Doubles

Kulicke & Soffa Exceeds Reduced Earnings Estimates

Eli Lilly Matches Earnings Expectations

SBC Meets Slightly Lowered Estimates

Schering-Plough Earnings In Line With Expectations

Reader's Digest(RDA) reported second-quarter earnings of $1.07 a share, beating the six-analyst estimate of $1.04 and up from year-ago earnings of 90 cents a share. The latest quarter's earnings including costs of 2 cents a share from other operating items, an impairment loss and a write-off of an investment, 6 cents a share from a reversal of reserves resulting from a favorable state tax settlement, 5 cents a share related to an equity in losses of affiliates and goodwill amortization of BrandDirect Marketing and 7 cents a share from negative effect of changes in foreign currency exchanges rates was 99 cents a share. Including losses of $10.5 million, or 10 cents a share, related to equity in losses of affiliates and goodwill amortization of BrandDirect Marketing, the company had year-ago earnings of 80 cents a share.

The publishing company said its second half earnings will be in line with estimates, with its third quarter at the low end of estimates and its fourth quarter at the high end of estimates. Reader's Digest closed down $3.50, or 9.5%, to $33.44.

Tollgrade Communications(TLGD) posted fourth-quarter earnings of 58 cents a share, 7 cents better than the five-analyst estimate and up from year-ago earnings of 39 cents a share.

The company, which makes trouble-shooting equipment for phone businesses, warned that a tough economic climate will slow its earnings growth in 2001.

Also, the company announced Mark Peterson was named president. Tollgrade ended the day down $13.88, or 27.8%, to $36.

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After Wednesday's Close

Akamai(AKAM) posted a fourth-quarter loss of 61 cents a share Wednesday, a smaller loss than analysts were expecting. Twenty-four analysts surveyed by First Call/Thomson Financial were expecting a loss of 68 cents a share. In the year-ago period, Akamai posted a loss of 40 cents a share. Akamai's revenue in the fourth quarter was $37.2 million, a nearly 14-fold increase from the year-ago period, when revenue was $2.7 million.

This morning, Merrill Lynch upgraded the stock to buy from accumulate, and Credit Suisse First Boston raised the stock's price target to $40 from $35. Akamai finished off the day down $5.75, or 16.3%, to $29.63.

Amgen(AMGN) said Wednesday that fourth-quarter revenue grew to $951.4 million from $926.9 million in the year-ago period. The biotechnology company reported earnings of 19 cents a share, including charges totaling 5 cents a share. Analysts were expecting the company to earn 25 cents for the quarter, a penny lower than the 26 cents Amgen posted in the same period last year. Amgen closed up $2.94, or 4.3%, to $72.

Integrated circuits maker Cirrus Logic(CRUS) reported fiscal third-quarter earnings that exceeded expectations by 4 cents, with 30 cents per share, but said it expects flat revenues in the fourth quarter. Third-quarter revenues rose 38% from the year-ago period, to $208 million. Cirrus Logic finished out the day down $2.88, or 9.5%, to $27.44.

Click Commerce(CKCM) reported a fourth-quarter loss of 2 cents per share, compared with a profit of 1 cent in the year-ago period. But the company said it expects to turn a profit in 2001. Click Commerce ended the day up $4.81, or 19.8%, to $29.13.

Corning(GLW) reported fourth-quarter earnings that easily beat analysts' expectations, a result the company attributed to strong demand for its high-data-rate optical fiber and other optical-communications products.

Fourth-quarter earnings rose to $314.6 million, or 34 cents a share. According to First Call/Thomson Financial, analysts expected the company to earn 28 cents. The Corning, N.Y.-based optical-networking company earned $142.2 million, or 18 cents a share, in the year-ago fourth quarter.

The company also warned of softer demand from telcos. On that note, Merrill Lynch downgraded the fiber-optic cable maker's intermediate-term rating to accumulate from buy. In a research note this morning, the firm said, "Some cautionary comments about the company's two most profitable businesses leads us to believe that upside to EPS could be more limited during 2001 than we previously anticipated."

It also got socked by downgrades from ABN Amro to add from buy and Salomon Smith Barney to outperform from buy. Solly also cut the stock's price target to $90 from $95.

DTE Energy(DTE) reported earnings up 43% on the year, beating analyst expectations by 2 cents with 97 cents per share. DTE is the parent company of Michigan's largest utility, Detroit Edison. DTE finished out the day up 25 cents, or 0.7%, to $36.63.

Online brokerage E*Trade(EGRP) reported first-quarter earnings of $5.8 million, or 2 cents per share, while revenues grew 22% from the year-ago period to $334 million. The company posted losses of $38.1 million, or 13 cents per share, last year. The company also added 244,000 new brokerage and banking accounts during the quarter, bringing its total to 3.6 million. E*Trade closed down 3 cents, or 0.2%, to $13.94.

Web-hosting firm Exodus Communications(EXDS) reported a narrower-than-expected fourth-quarter loss after the close of trading on Wednesday.

The company said that excluding the amortization of goodwill and intangible assets, it posted a loss of $55.8 million, or 13 cents per share. That's 3 cents narrower than the loss expected by analysts polled by First Call/Thomson Financial. Exodus closed down $3.44, or 12.2%, to $24.75.

Foundry Networks(FDRY) posted fourth-quarter earnings Wednesday that beat estimates that had been drastically lowered in December.

The maker of networking switches and routers posted earnings of 17 cents a share on revenue of $105.1 million. In December, Foundry warned that per-share earnings would be between 11 cents and 14 cents. Analysts at the time were expecting 24 cents a share, and their most recent consensus estimates were 12 cents a share, according to First Call/Thomson Financial. Foundry ended the day up $1.06, or 5.1%, to $22.

Specialty chemical company Great Lakes Chemical(GLK) reported earnings above analyst forecasts but down from the year-ago quarter with 39 cents per share. The company blamed higher energy costs and slowing demand in some of its markets. Analysts were expecting 37 cents per share and the year-ago figure was 56 cents per share. However, net sales rose 6% to $405 million. Great Lakes Chemical finished out the day up 44 cents, or 1.3%, to $33.69.

Harmonic (HLIT) reported a fourth-quarter loss of 30 cents per share at the low end of its reduced guidance and steeper than analyst forecasts of 26 cents. The company, which makes transmitters and receivers for high-speed Internet access and video-on-demand services, warned in December that it would post a loss of between 20 cents and 30 cents per share in the quarter. Harmonic posted net sales of $52 million for the quarter, near the center of the range it had forecast for the quarter. The company expects to see further losses in the first two quarters of 2001. Harmonic closed down $1.75, or 16.1%, to $9.13.

Drugmaker Immunex(IMNX) said Wednesday that its fourth-quarter profits rose more than 200% to 9 cents a share, beating analyst forecasts by a penny. The company attributed the earnings growth to a 65% rise in sales of its primary drug, anti-arthritis treatment Enbrel. Revenues for the quarter rose to $250.7 million from $162.6 million the previous year.

Today, Robertson Stephens downgraded Immunex to long-term attractive from buy. Immunex finished out today down $1.13, or 3.3%, to $33.25.

Storage-area network productsmaker JNI(JNIC) reported fourth-quarter earnings of 19 cents per share, in line with analyst estimates and well above the previous year's 5 cents per share. JNI sees full year 2001 revenue growth of 50% to about $150 million. The company expects to earn between 80 cents and 85 cents per share this year.

This morning, Bear Stearns downgraded the stock to attractive from buy. The firm also cut 2001 EPS view to 80 cents from 95 cents, and 2002 EPS view down to $1 from $1.25. JNI ended the day down $5.44, or 21.3%, to $20.06.

Computer disk-drivemaker Maxtor(MXTR) reported fourth-quarter earnings of 4 cents a share, up from 3 cents a year ago. Analysts were expecting zero-per-share earnings. Maxtor's fourth-quarter revenues rose to $727.2 million from $690.6 million in the year-ago quarter. Maxtor closed down 48 cents, or 5.8%, to $7.88.

Computer data-storage company McData(MCDT) Wednesday reported fourth-quarter earnings up 32% from the third quarter at 12 cents per share, beating Wall Street estimates by a penny. Data-storage leader EMC (EMC) owns a 74% stake in McData but said it will spin off that stake to shareholders in February.

Earlier today, Merrill upgraded it to buy from accumulate and 2001 EPS view UP to 51 cents from 43 cents. CSFB raised McData's 2001 revenue view UP to $447 million from $358 million. McData ended today down 94 cents, or 1.5%, to $60.56 and EMC ended down $2.94, or 3.7%, to $76.50.

Murphy Oil(MUR) Wednesday reported fourth-quarter earnings more than double the year-ago figure, with $2.10 per share. In December the company lowered its fourth-quarter estimates due to lower margins in refining and marketing. The company also said it expects earnings of $2.50 to $3.00 for the first quarter. Analysts were expecting $1.95 for the fourth quarter and $2.67 for the first quarter. Murphy Oil closed up $2.75, or 4.9%, to $59.38.

Newport(NEWP) reported fourth-quarter earnings per share of 36 cents, towering above the 10-cent figure from last year. Newport makes fiber-optics technology components. Newport ended down $24.50, or 22.6%, to $83.94.

Nextcard(NXCD) reported a 37 cent loss in the fourth quarter of this year, compared with a 53 cent loss the previous year. Nextcard closed down 6 cents, or 0.7%, to $9.63.

Recording headmaker Read-Rite(RDRT) reported first-quarter earnings of 11 cents per share, beating analyst estimates by 8 cents as revenues jumped 30% from the previous quarter's levels. The company said it was expecting flat to modest revenue growth for its second fiscal quarter and earnings of 11 cents to 14 cents per share. Analysts were expecting 6 cents a share for the second quarter. Read-Rite finished the day up 81 cents, or 9.6%, to $9.06.

Data-storage products company Sandisk(SNDK) reported a sharp slowdown in fourth-quarter sales, which it said could continue into the first two quarters of 2001. The maker of flash memory chips used in digital cameras and handheld devices reported fourth-quarter revenues of $177.7 million, 12% below analyst forecasts. The company beat analyst earnings estimates by 7 cents, however, with 41 cents per share.

Today, Morgan Stanley downgraded Sandisk to neutral from outperform. Sandisk closed down $15.06, or 32.6%, to $31.13.

Medical equipmentmaker Varian Medical Systems(VAR) reported fiscal first-quarter earnings up 81% from the year-ago period, beating analyst estimates. The company reported earning of $9.4 million, or 28 cents per share, up from $5.2 million or 17 cents per share a year ago. Analysts were forecasting earnings per share of 21 cents. Revenues and orders were up 14% from the year-ago quarter. Varian finished today up $10.25, or 18.1%, to $66.75.

Veritas Software(VRTS), the Silicon Valley data storage software company, easily surpassed Wall Street's revenue and earnings expectations when it reported its fourth-quarter results Wednesday.

The company, which has a $42 billion market capitalization, had income excluding charges of $83.9 million, or 19 cents per share, on revenue of $370.1 million. Analysts were expecting the company to earn 17 cents per share on revenue of $347 million, according to Multex.com. For the same quarter a year ago, the company earned 12 cents per share on $226 million in revenue. Veritas ended the day down $8.88, or 8.5%, to $95.19.

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Analyst actions

DuPont(DD) got socked with some negative notes on a warning from the company that raw material costs and the economic slowdown hurt its chemical sales in the first half of the year. UBS Warburg knocked the company's 2001 earnings view down to $2.20 from $2.40 a share and lowered DuPont's target price to $40 from $50. Goldman Sachs slashed the company's 2001 earnings estimate to $2.25 a share from $2.50. DuPont ended the day up 13 cents, or 0.3%, to $42.

Upgrades

Gap(GPS): UP to strong buy from hold at UBS Warburg and price target UP to $40 from $32. Gap finished out the day up $2.13, or 7.1%, to $32.13.

Symbol Technologies(SBL): price target UP to $57 from $44 at Credit Suisse First Boston. Symbol closed up $5.25, or 13.3%, to $44.81.

Downgrades

Exodus(EXDS): price target DOWN to $55 from $85 at UBS Warburg. Exodus

Kana Communications(KANA): DOWN to hold from buy at CSFB. Kana ended down $2.69, or 28.5%, to $6.75.

Qwest Communications(Q): DOWN to outperform from strong buy at Morgan Stanley Dean Witter. Qwest closed down $2.69, or 5.7%, to $44.38.

Rohm & Haas(ROH): DOWN to market perform from strong buy at Lehman Brothers. Rohm & Haas ended up 94 cents, or 2.8%, to $34.63.

TRW(TRW): DOWN to hold from buy at CSFB. TRW finished today down 88 cents, or 2.4%, to $36.63.

Turnstone Systems (TSTN): DOWN to market perform from buy at Robbie Stephens. Turnstone closed down $2.25, or 24%, to $7.13.

Initiations

C&D Technologies (CHP): NEW buy at Robbie Stephens. C&D finished up $1.13, or 2.3%, to $49.50.

Group Moves

Deutsche Banc Alex. Brown started coverage of 11 companies in the homebuilding sector, including:

• Centex(CTX): NEW strong buy. Centex closed up $2.19, or 5.8%, to $40.19.

• Pulte Homes(PHM): NEW market perform. Pulte closed down 6 cents, or 0.2%, to $36.25.

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Offerings and stock actions

National Semicondutor(NSM) announced it launched a buyback program of up to 8 million shares of its own stock. National Semiconductor ended the day down $1.44, or 5.3%, to $25.94.

Viad(VVI) said it will buy back 2 million to 3 million shares of common stock. Viad closed up 81 cents, or 3.6%, to $23.69.

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Miscellany

Atlas Air(CGO) was mourning the loss of its founder and CEO, Michael Chowdry, who died piloting his private plane near Denver on Wednesday. Chowdry, who came here from Pakistan as a boy, built up his company to being the world's No. 3 cargo airline. He was 48. Also killed in the accident was Jeff Cole, an aerospace journalist for The Wall Street Journal.

Deutsche Banc Alex. Brown downgraded the stock to market outperform from buy because of Chowdry's close involvement with all aspects of Atlas Air's business. Atlas Air ended down $1.81, or 5%, to $34.44.

Morgan Stanley Dean Witter(MWD) appointed Howard Hoffen as chairman and CEO of its private equity unit, which invests in a variety of industries through its investment funds. Morgan finished the day down $1.38, or 1.6%, to $82.88.

St. Jude Medical(STJ) received European Union approval to market its Alliance catheter delivery system, which is used to treat heart failure and arterial fibrillation. St. Jude closed up 75 cents, or 1.3%, to $58.69.

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After Wednesday's Close

BMC Software(BMCS) Wednesday said that its chief financial officer, Williams Austin, had resigned, only three weeks after he was named. The softwaremaker named John Cox, who has been chief accounting officer and controller since 1999, as the acting CFO, while Austin will remain in an advisory role until Oct 31. BMC Software closed down 31 cents, or 1%, to $29.94.

Energy services provider Ogden(OG) named Edward Moneypenny its new executive vice president and chief financial officer. Moneypenny comes from diversified electric power company Florida Progress(FPC), where he was senior vice president of finance and chief financial officer. Moneypenny succeeds Raymond E. Dombrowski. Ogden finished down 56 cents, or 3.2%, to $16.88.

Beleaguered photography giant Polaroid(PRD) said today that its chief financial officer, Judith Boynton, had stepped down. Vice president and treasurer Carl Lueders will serve as acting CFO until a replacement is found. The company said Boynton left for personal reasons. Polaroid ended down 69 cents, or 9%, to $6.94.

Southern California Edison(EIX) said Wednesday that a court in Los Angeles had issued a temporary injunction barring the California Power Exchange from liquidating the utility's profitable forward contracts. The power exchange was planning to liquidate the contracts after the company failed to pay the exchange $215 million, which came due last week. But the beleaguered California utility is running out of time. The company said it will be out of cash by around Feb. 2, though it has no plans to voluntarily seek bankruptcy. California officials are struggling for solutions to the crisis. Southern California Edison closed up $3.31, or 35.3%, to $12.69.

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