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Tuesday's Winners & Losers: Springs, Broadcom, Marvell, Duane Reade, DDI

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  • M&A
  • Earnings/revenue
  • Analyst actions
  • Offerings/stock actions
  • Miscellany
  • By the Numbers
  • Updated from 6:50 p.m. Friday

    The first order of business should be to peruse the earnings releases from Home Depot (HD) and Wal-Mart (WMT).

    Briefly, Wal-Mart posted fourth-quarter earnings that beat estimates, despite a lackluster holiday season. Going forward, it said that first-quarter earnings will be in line with expectations.

    Home Depot's release was bleaker, coming in with fourth-quarter earnings that met lowered expectations and were less profitable than last year. That said, the Depot was comfortable with first-quarter estimates.

    Check out the full-length stories for all the details:

    Wal-Mart Earnings Beat Estimates

    Home Depot Earnings Hit Target


    JDS Uniphase (JDSU) and other suppliers of fiber-optic components had their economic fortunes reduced yet again this morning.

    The latest reduction comes courtesy of Lehman Brothers, which lowered earnings estimates on JDS Uniphase, Broadcom (BRCM), Applied Micro Circuits (AMCC) and PMC-Sierra (PMCS). Lehman said it made the revisions because of inventory problems and the companies' limited ability to forecast near-term business growth.

    Credit Suisse First Boston analyst Charlie Glavin jumped into the fray, downgrading PMC-Sierra to hold from buy, citing "industry conditions that have actually gotten worse over the last few weeks." Glavin also cut Applied Micro Circuits to buy from strong buy due to soft March and June orders. Last week, CSFB and Merrill Lynch reduced JDS Uniphase's earnings estimates .

    "Forward visibility is extremely poor as order cancellations and push-outs make it extremely difficult to predict the final outcome of the March quarter, let alone the June quarter," Lehman analyst A. Chanda wrote to investors. "We are therefore reducing our estimates."

    • JDS Uniphase's 2001 and 2002 earnings estimates were trimmed below Wall Street consensus estimates, due mainly to poor visibility and the ramifications of Nortel Networks' (NT) earnings warning last week. Earnings for 2001 are now expected to be 72 cents a share, down from 74 cents, on a revenue forecast of $3.8 billion, $100 million lower than the previous estimate. Earnings for 2002 are forecast at 74 cents a share, down from 86 cents. "We believe that it is likely that JDS revenues will slow, especially in the passive arena where inventory builds are most acute and price competition is likely to emerge first," Chanda wrote.

    • Applied Micro's 2001 earnings-per-share estimate was trimmed by a penny to 56 cents from 57 cents, and its 2002 earnings-per-share estimate was slashed to 67 cents from 80 cents. Revenue for 2001 is now pegged at $674 million, down from $828 million.

    • Broadcom's 2001 earnings-per-share estimate was slashed by 18%, to $1.25 from $1.53, with Lehman pointing to multiple issues. Among them: inventory problems at customers Motorola (MOT) and Cisco (CSCO), slowing growth for cable modems, plus increased competition from competitors like Marvell (MRVL). The revenue estimate for 2001 was cut to $1.85 billion from $2.26 billion.

    • PMC-Sierra received a mild slap from Lehman, which said the company was the least likely of the four to reduce estimates going forward. PMC Sierra's 2001 earnings estimate was lowered to 70 cents a share from 84 cents a share, while the revenue forecast was cut to $691 million from $800 million.

    After a rip-roaring January, technology components suppliers have fallen lower and lower in February as companies continue to complain that the next few quarters will be weak or admit they're not sure of the outlook for the first half of 2001. JDS Uniphase gained 31.5% in January only to stumble 34.7% in February as its competitors warned about slowdowns.

    Joe Kalinowski, equity strategist with First Call/Thomson Financial, said that 289 companies have already preannounced for the first quarter, and almost a third of those are technology-related businesses. In comparison, only 33 companies had said anything about the first quarter at this point last year.

    As these preannouncements flood the market, look for more analyst adjustments, market movements and sleepless nights -- because sometimes, the only problem with improving visibility is not enjoying the view.

    Mergers, acquisitions and joint ventures

    Are those Bugle Boy jeans you're coveting? Interesting question, really. Tropical Sportswear International (TSI) said it is considering a bid to buy some assets of Bugle Boy Industries, which filed for bankruptcy protection last week. Tropical is eyeing Bugle Boy's wholesale and licensing operations. Earlier in the month, Perry Ellis International (PERY) snapped up Bugle Boy's wholesale operations, including its trade name and inventories, so Tropical will be picking through whatever's left.

    Celestica (CLS), an electronics contract-manufacturer, has attracted a bunch of attention from investors lately as cost-cutting companies choose to outsource manufacturing. And with business looking so good, Celestica needed to do some shopping to keep up with demand. It just announced that it will buy some of communications-systems builder Avaya's (AV) manufacturing capabilities for $200 million. Celestica will snap up Avaya's Denver and Little Rock operations, with about 1,400 employees total.

    Springs Industry (SMI) makes fabric. It also trades publicly on the New York Stock Exchange . One of those two things might be changing soon, and it ain't the business model. Springs said it's received an offer from a minority shareholder and a private equity firm to take the company private. The deal is valued at $44 a share, better than the $36.10 that Springs closed at on Friday, but less than the 52-week high of $51. The Close family, descendants of the company's founder and holders of 41% of Spring's common stock, made the offer along with Heartland Industrial Partners, which makes linens and fabrics.

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    Earnings/revenue reports and previews

    Duane Reade (DRD), the drug-store chain frequented by many New Yorkers, announced fourth-quarter earnings of 51 cents a share, matching Wall Street estimates and beating the year-ago 38 cents a share. Sales came in at $287.3 million, way up over last year's $229.6 million. Pharmacy sales increased 36%, while sales at stores open at least one year grew by 7.3%. Going forward, Duane Reade said first-quarter earnings would come in between 12 cents and 14 cents a share, lower than the 15 cent estimate from First Call/Thomson Financial. Full-year earnings are pegged between $1.48 and $1.52 a share, lower than the $1.58 estimate.

    International Flavors & Fragrance (IFF) announced that 2001's revenue growth would not smell as good as last year's, coming in around the low-single digits. The revenue forecast apparently won't affect the bottom line, however. The $1.42 a share 2001 earnings forecast announced by International Flavors on Feb. 1 remained unchanged. Analysts expect the company to make $1.32 a share. International Flavors said it will sell off its aroma chemicals business to help pay down debt and will re-evaluate other braches in order to focus on its core business.


    After Friday's Close

    Convenience store giant 7-Eleven (SE) said same-store merchandise sales rose 2.5%. A year ago, the company's same-store sales jumped 6.2%.

    Total merchandise sales for the month were $505.4 million, up 3.9%, from year-ago revenue of $486.6 million.

    Southern California Edison, a unit of Edison International (EIX), said it withheld payment of $78 million of California power exchange credits that were due Thursday. Instead, it paid interest on several bond issues to avoid triggering defaults.

    In a filing with the Securities and Exchange Commission, the utility said it paid about $15.9 million on senior unsecured notes, which were supposed to be paid Jan. 16. Also, it said that since Jan. 16 it has paid about $792 million of interest on bonds that were issued to finance pollution control facilities, and $22.7 million to repurchase bonds that could not be remarketed.

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    Analyst actions

    Upgrades

    Atlas Air (CGO): UP to strong buy from outperform at Deutsche Bank Alex. Brown.

    Best Buy (BBY): UP to buy from accumulate at Merrill Lynch.

    Royal Dutch-Shell (RD): UP to hold from buy at Credit Suisse First Boston.

    TrizecHahn (TZH): UP to market outperform from market perform at Goldman Sachs.

    Downgrades

    Bank One (ONE): DOWN to market perform from market outperform at Goldman Sachs.

    Nextel Communications (NXTL): DOWN to outperform from buy at Salomon Smith Barney.

    Initiations

    DDI (DDIC): NEW strong buy at Credit Suisse First Boston.

    Peet's Coffee and Tea (PEET): NEW buy at W.R. Hambrecht; price target: $14.

    Rudolph Technologies (RTEC): NEW strong buy at Prudential Securities; price target: $62.

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    Offerings and stock actions

    TECO Energy (TE) announced that it will be releasing 7.5 million shares of common stock during the week of March 5. Proceeds from the sale will go toward general corporate purposes.


    After Friday's Close

    Edison Schools (EDSN), a private manager of public schools, filed for a public offering of 5.5 million shares, including 2.75 million being offered by shareholders.

    LifePoint Hospitals (LPNT), which operates 21 hospitals, said it filed for a public offering of 3.3 million shares.

    Triumph Group (TGI), an aircraft-components maker, filed for an offering of 3.65 million shares, which includes almost 650,000 shares being offered by a selling stockholder.

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    Miscellany

    Break out the lineup card, because Varian Semiconductor (VSEA) has shuffled the top of the order. The company announced that CEO Richard Aurelio now will also be chairman of the board, after J. Tracy O'Rourke announced his retirement. CFO Ernest Godshalk will become the company's president and COO, both newly created positions. Robert Halliday will become the new CFO. All these changes are effective immediately.


    After Friday's Close

    OraPharma (OPHM) said the Food and Drug Administration approved Arestin, the company's treatment for periodontal disease.

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    By the Numbers

    5 Biggest NYSE Percent Winners
    Name Price Change %
    Sola International (SOL) 9.21
    1.46

    18.8%
    RGS Energy (RGS) 36.40
    3.30

    10%
    Pediatrix (PDX) 23.50
    2

    9.3%
    TRC (TRR) 30.25
    2.50

    9%
    Westwood One (WON) 21.71
    1.61

    8%

    5 Biggest NYSE Percent Losers
    Name Price Change %
    Crown Cork & Seal (CCK) 5.44
    1.76

    24.4%
    Duane Reade (DRD) 32.45
    6.85

    17.4%
    Turkcell (TKC) 5.72
    1.07

    15.8%
    Safeguard Scientifics (SFE) 7.65
    1.43

    15.7%
    Agilent (A) 44
    6

    12%

    5 Biggest Nasdaq Percent Winners
    Name Price Change %
    Schuler Homes (SCHLR) 15.25
    3.0625

    25.1%
    Langer Biomechanics (GAIT) 5.125
    1

    24.2%
    Metricom (MCOM) 6.78125
    1.28125

    23.3%
    New Era Networks (NEON) 6.9375
    1.1875

    20.7%
    BEI Technologies (BEIQ) 16.6875
    2.5

    17.6%

    5 Biggest Nasdaq Percent Losers
    Name Price Change %
    Aeroflex (ARXX) 17.4375
    8.8125

    33.6%
    WebMethods (WEBM) 47.5
    14.875

    23.8%
    Luminent (LMNE) 7.3125
    2.1875

    23%
    U.S. Physical Therapy (USPH) 14.125
    4.125

    22.6%
    Anaren Microwave (ANEN) 20.5
    5.5625

    21.3%

    The data on NYSE and Nasdaq percent winners and losers are filtered to exclude stocks whose previous day's volume was less than 25,000 shares; whose last price was less than 5; and whose net change was less than 1/2.

    5 Biggest Dow Point Winners
    Name Price Change %
    Boeing (BA) 61.85
    1.86

    3.10%
    Johnson & Johnson (JNJ) 96.03
    1.50

    1.59%
    Philip Morris (MO) 47.93
    1.40

    3.01%
    Home Depot (HD) 44.09
    1.09

    2.53%
    SBC Communications (SBC) 48.77
    1.05

    2.20%

    5 Biggest Dow Point Losers
    Name Price Change %
    IBM (IBM) 111.50
    3.50

    3.04%
    Intel (INTC) 31.4375
    2.9375

    8.55%
    Citigroup (C) 51.20
    2.80

    5.19%
    Hewlett-Packard (HWP) 30.50
    2.63

    7.94%
    J.P. Morgan Chase (JPM) 49.95
    2.04

    3.92%

    Dow point gain and loss data are based on New York closing prices and do not reflect late composite trading.

    Large-Cap Nasdaq Movers
    Name Price Change %
    Cisco (CSCO) 26.0625
    2.0625

    7.30%
    Dell (DELL) 22
    1.4375

    6.13%
    Ericsson (ERICY) 8.8125
    .09375

    1.05%
    Intel (INTC) 31.4375
    2.9375

    8.55%
    Microsoft (MSFT) 55.875
    1.375

    2.40%
    Oracle (ORCL) 23.125
    .9375

    3.91%
    Qualcomm (QCOM) 75.53125
    5.25

    6.51%
    Sun Microsystems (SUNW) 22.25
    .9375

    4.04%
    WorldCom (WCOM) 16.375
    .375

    2.37%
    Yahoo! (YHOO) 26.5625
    2.0625

    7.32%

    Back to top

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