Ticker-Tape Parade: Look for Xilinx, Palm, Vitesse to Move

Get the scoop on today's events and company news in one place.
By Eric Gillin ,

(Updated from 8:16 a.m. ET)

Sometimes, a turnabout is foul. Just ask

Xilinx

(XLNX) - Get Report

.

On June 4,

the company said first-quarter revenue would be 15% to 20% lower, but that it could make earnings targets and was comfortable with forecasts. Last night, however, three weeks and a day later, the integrated circuit-maker announced that first-quarter revenue would fall 32% from the $407 million it booked in the previous quarter. As a result, revenue will come in around $277 million, way short of the $320.9 million expected by analysts and down some 24% from the year-ago quarter.

This warning only adds more bad news to the semiconductor space, which reeled from rival

Applied Micro Circuits'

(AMCC)

earnings warning yesterday and the overall decimation of the communications circuit space, where companies like

Lucent

(LU)

and

Nortel

(NT)

are scrapping to make their quarters. For more on Xilinx's warning, check out

Caroline Humer's

story "

Xilinx Cuts Guidance, Just Weeks After Reaffirming Prior Guidance."

Earnings Reports & Warnings:

ATI Technologies

(ATYT)

, the largest producer of video chips and rival of

Nvidia

(NVDA) - Get Report

, said third-quarter sales came in at $255.9 million, 11% less than the year-ago $288.2 million. But analysts only expected the company to book $241.25 million in sales, which could hearten investors. The stock has risen 45% year to date, and the company warned that fourth-quarter revenue could be affected by a transition to a new business strategy.

CVS

(CVS) - Get Report

, America's second-largest drugstore chain, warned that earnings would come in lower than expected because of slumping same-store sales and increased pressure to gross margins. Instead of double-digit percentage growth, the company now expects calendar 2001 earnings to be between 7% and 9% better than the year-ago earnings of $1.80 a share. That means 2001 EPS is pegged between $1.92 and $1.96, missing the $2.08 expected by analysts.

Dean Foods

(DF) - Get Report

reported fourth-quarter earnings of 43 cents a share, the high end of the range it established when warning about earnings a week ago. It beat the lowered analyst estimate of 41 cents a share, but really, that's a misleading data point. When Dean preannounced a week ago, analysts were calling for a 64-cent profit. And last year, the company made 83 cents a share. The company agreed to merge with rival

Suiza Foods

(SZA)

, America's largest dairy, for $2.5 billion on April 5, which resulted in some merger-related charges to the current quarter. No other merger-related comments were made, however.

General Mills'

(GIS) - Get Report

said fourth-quarter earnings came in at 42 cents a share, in line with estimates and better than the year-ago 37 cents a share. Sales rose to $1.81 billion from the year-ago $1.69 billion. In February, General Mills bought

Pillsbury

, but was forced to jettison pieces to avoid the

Federal Trade Commission's

wrath. The deal should close in the first quarter of 2002, according to the company. Recently, it sold part of the Pillsbury empire to

International Multifoods

(IMC)

.

MasTec

(MTZ) - Get Report

said second-quarter earnings will come in at 36 cents a share, lower than the 38 cents expected by analysts. Now, MasTec may not be well known or very large, but this company is the tech-lover's grease monkey, physically installing the cable and gear customers like

AOL Time Warner

and

Enron

buy. The company said slowing demand for telecommunications equipment took its toll, a reminder of not only how bad the telecom slowdown is, but also how interconnected these industries are.

Palm

(PALM)

announced the results of its fourth quarter, topping drastically lowered analysts' estimates by a healthy margin. The handheld computing company said losses came in at 16 cents, narrower than the 19-cent loss expected by analysts. Those figures exclude a $436.5 million charge for restructuring, which includes a $270 million inventory write-down. Revenue figures were also strong, with Palm booking $165 million, better than the $145.5 million estimate. But by all accounts, this quarter was an utter washout when compared with last year, when the company booked a 3-cent per share profit on $350.2 million in revenue. For more on Palm's quarter, including CEO Carl Yanowski's outlook, read

Tish Williams'

"

Palm Quarter Turns Out a Little Better Than Expected."

Vitesse Semiconductor

(VTSS)

joins rival Applied Micro Circuits in warning about its profit outlook, telling investors its third quarter will come in with a loss instead of the 3-cent profit expected by analysts. Vitesse expects a 6-cent loss, but does not expect to make any more layoffs. On April 16, the chipmaker said third-quarter earnings would be between 3 cents and 7 cents a share, but said it revised those estimates because of weak demand and order cancellations. With Applied Micro and Xilinx having warned already, eternal optimists could be calling for yet another bottom to the decimated semiconductor business.

Miscellaneous News:

Allergan

(AGN) - Get Report

and

Inspire Pharmaceuticals

(ISPH)

will be joining forces to combat the horrors of dry eyes. The drugmaker and the biotech firm announced a joint licensing agreement that includes Inspire's INS365 Opthalmic product and Allergan's Restasis cyclosporine opthamic emulsion, both of which are already in Phase III testing, the last stage before the

Food and Drug Administration

considers approving a treatment. Under the deal, Allergan gets to use Inspire's product, while Inspire receives up to $39 million in payments and a cut of the money made by the jointly marketed final product.

JDS Uniphase

(JDSU)

announced that it was cutting 5,000 jobs, or 20% of its workforce, on April 24. Now expect even more jobs to be lost when the company reports earnings at the end of July. Today, a company spokesman told

Reuters

that it would be announcing more layoffs, but didn't specify how many employees would be asked to leave. This is just the latest in bad news from JDS, which cut guidance on June 14.

Lucent

(LU)

will be cutting another 10,000 employees from its roster, according to a story in this morning's edition of

The Wall Street Journal

. The troubled telco, which already saw its credit rating slashed to junk status and profits dry up amid an industry downturn of historical magnitude, is expected to announce the layoff decision in late July, when it releases earnings results. Currently employing 104,000, Lucent has made many attempts to reduce its staff, axing 10,000, offering early retirement packages. It also plans to sell its fiber-optic unit.

On the Analyst Front:

Disney

(DIS) - Get Report

was downgraded to market outperform and removed from

Goldman Sachs'

U.S. recommended for purchase list by analyst Richard Simon. Put simply, Simon said the media juggernaut will face tremendous trouble selling upfront advertising for its networks, which includes broadcast arm ABC and stakes in cable outfits ESPN and A&E. He trimmed back his fiscal 2002 EPS estimate to 84 cents a share, cutting it a whopping 11 cents, much lower than the 94 cents expected, on average, by his peers. Look for a definitive market reaction to the news, since Goldman is the first high-profile brokerage to come out and openly doubt Disney's fiscal 2002.

Xilinx was shelled by the analyst community after warning last night, just three weeks after reaffirming guidance.

Lehman Brothers'

Dan Niles dropped his estimates and told investors waiting for the recovery that it better come soon, because Xilinx left "no room for error." Goldman and

Prudential

also reduced estimates.

Today's Earnings:

Cabletron Systems

(CS) - Get Report

will report first-quarter earnings after the bell, with analysts expecting the company to take home 8 cents a share against last year's 2-cent loss. The Internet infrastructure company offered guidance in March and hasn't preannounced. One thing to look for is additional news regarding Chairman Piyush Patel's plan to spin off two units,

Aprisma Management Technologies

and

Enterasys Networks

.

Corel

(CORL)

is expected to lose 6 cents a share when it announces the results of its second quarter after today's bell. Last quarter, the company promised it would come in with a profit and was successful, but management will still face some tough questions. One good one: What does the rest of the year look like for the software maker, which in March said it was "reasonably confident" the company would be profitable during the second half of the year?

Doug Kass' Required Reading:

Paul Krugman's

New York Times

editorial on the Op-Ed page, "

Turning California On." (Registration required.)

On the Economic Lookout:

At 2:15 p.m., the results of the two-day

Federal Open Market Committee will be released, ending speculation about how much the Fed will cut rates, be it 50 basis points or 25 basis points. Although the size of a move is important, even more key are the central bank's thoughts on the economic recovery. Expect a deluge of reaction when the news hits. Eager folks can get a head start by reading

Dave Gaffen's

story, "

Fed to Choose Its Economic Stimulus Weapon: 25-Caliber or 50?"

At 6:30 p.m., the

Consumer Comfort Index, a barometer of consumer mood, will be released by

ABC News

and

Money Magazine

for the week ending June 23. The previous week came in with a 4, which means that people pretty "blah" about the state of things overall. The past two or three releases have been relatively flat, but the overall trend is clearly towards the "less comfortable" end of the spectrum. This information usually isn't earth-shattering, but is used with other data to gauge overall mood.

In Overnight Activity:

Palm was one of the most hotly traded issues, gaining nearly 17% after topping analyst predictions for its fourth quarter. Rival

Handspring

(HAND)

also got a decent pop, gaining 7% in after-hours trading.

Xilinx drastically lowered its first-quarter revenue targets from a 15%-to-20% quarter-to-quarter slide to a 32% slide, as mentioned above. The company got shelled in late-night trading, dropping 5.2%. Xilinx customers

Alcatel

(ALA)

,

IBM

(IBM) - Get Report

and

Nokia

(NOK) - Get Report

did not trade much in the low volume postclose session, but could make wider moves today.

3Com

(COMS)

, Palm's parent company before the unit was spun it off as a separate entity, announced dismal fourth-quarter results, with more than a half-million dollars in losses, well short of the year-ago $147 million loss. The company dropped 3.1%, with earnings coming in at a 61-cent loss vs. the analysts' call for a 57-cent loss.

For an extended take on late-night action, be sure to check out

The Night Watch.

Sources & Definitions:

All analyst EPS estimates are from Thomson Financial/First Call, unless otherwise noted. All economic forecasts are from

Reuters

, unless otherwise noted. All times are Eastern, always. After-hours quotes courtesy of Instinet, unless otherwise noted.

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