Results for the tech stocks in last week's preview were a mixed bag, some beats, some misses, some in line. By and large, expectations for tech companies reporting results this week remain high, though. Here's what analysts surveyed by Thomson Financial are anticipating in the way of earnings, as compared to the same period of the previous year.
MOST NOTEWORTHY: Sigma Designs, Sky West and UBS AG were today's noteworthy downgrades:
Sigma Designs (NASDAQ: SIGM) was lowered to Neutral from Outperform at Baird citing checks that indicate a more muted revenue outlook in 1H08 vs. 2H07.
Soleil downgraded shares of Sky West (NASDAQ: SKYW) to Hold from Buy to reflect the high-fuel-price environment and headwinds from the legacy carrier consolidation.
Bear Stearns downgraded UBS (NYSE: UBS) to Peer Perform from Outperform on concerns of further subprime write-downs.
OTHER DOWNGRADES:
Dresdner Kleinwort downgraded Credit Suisse (NYSE: CS) to Hold from Buy.
Morgan Joseph lowered Superior Essex (NASDAQ: SPSX) to Hold from Buy.
Bed Bath & Beyond (NASDAQ: BBBY) was downgraded to Underperform from Market Perform at Morgan Keegan.
I don't care to try to predict if we're heading into recession or how bad that recession will be. I have no idea where the market will bottom or how long it will take to get there; the one thing I do know is that stocks are going to continue to get wrecked, whether or not we have a short-term bounce. Amazingly, it's been just eighteen days since I warned investors the market would drop 10% in 2008 and now we're already there. I've considered buying quality growth stocks like Mosaic (NYSE: MOS), Monsanto (NYSE: MON), Sigma Designs (NYSE: SIGM), Priceline (NASDAQ: PCLN), BE Aerospace (NASDAQ: BEAV), Vistaprint (NASDAQ: VPRT) and Lululemon (NASDAQ: LULU) on weakness, but their continued downtrending has made them falling knives, aka, too unpredictable for me.
My fellow blogger Lita Epstein has talked about picking up bargains on beaten stocks with strong fundamentals. I disagree with her. While maybe her statement applies to a precious few like Apple (NASDAQ: AAPL) and Amazon.com (NASDAQ: AMZN), I don't care how great those companies are, we're looking at a housing collapse and a massive slowdown in consumer spending which will hurt even the best of companies. For now, forget about stock picks; this is not the time for speculation. If foreign stock markets have tanked this hard on U.S. recession fears, imagine how hard U.S. stocks will get hit -- why not protect yourself and respect the downside for once?
Update: See the latest posts about stocks to buy from BloggingStocks.
After nailing the top in Apple (NASDAQ: AAPL) and warning investors this would be a painful year, I've been getting hundreds of emails from people asking me what to do next? As if suddenly after two correct predictions, I'm Nostradamus or David Blaine!
Make no mistake, I'm neither a forecaster nor a magician, I'm just a trader who bases his decisions around these key elements: a distrust of everyone and every company on Wall Street (made easier by the likes of MBIA (NYSE: MBI), E*Trade (NASDAQ: ETFC) and Countrywide Financial (NYSE: CFC); a respect, bordering on religion, for charts and a quick trigger finger if the charts turn against me. I know people want longer term predictions, but I believe those to be 100% guessing games and potentially hazard to your investment health. Pregnant women should avoid them at all costs. Just kidding, it's fine for some people, but I like to make my predictions and cash out, so I can enjoy stress-free weekends if you catch my drift.
So, here's what I see right now: two weeks in and we're already halfway to my 10%-down market prediction, and Apple is down 15% (take that you stereotypical cheerleaders, go date some football players)! The markets are definitely rolling over, and while it's usually a long, drawn-out process, the charts seem to have little concern for what's normal as all the major indices have formed perfect head-and-shoulders patterns (a very bearish sign) and investors are rightfully freaking out.
Sigma Designs (NASDAQ: SIGM) develops and markets high-performance system-on-a-chip semiconductors for Internet Protocol set-top boxes, DVD players/recorders, high definition TVs, digital media adapters, portable media players and ultra-wideband connectivity products. The company also offers engineering support services and customized chipset development. It has alliances with a variety of well-known tech names, including Cisco Systems (NASDAQ: CSCO), Microsoft (NASDAQ: MSFT) and Alcatel-Lucent (NYSE: ALU).
Sigma Designs surprised the Street last week, when it reported Q3 EPS of 79 cents and revenues of $66.2 million. Analysts had been expecting 55 cents and $51.8 million. Management also guided Q4 revenues to about $72.8-$76.1 million ($54.76M consensus). RBC Capital Markets upgraded the shares to "outperform". Six other brokerages reiterated recommendations of "buy" to "strong buy". All seven firms boosted their price targets to points in the $75-100 range.
"I use the term 'blowout' very sparingly," says tech expert Paul McWilliams in his Next Inning newsletter, which focuses solely on technology investing. "But even 'blowout' falls short of describing the quarter turned in by Sigma Designs (NASDAQ: SIGM)."
Indeed, the advisor notes, "I've likely described something as a 'blowout' less than ten times in the past five years. These 'waterfall' quarters don't happen often. As for Sigma, I didn't see this one coming and it's time to fix it.
"As background, SIGM makes media processor SoC (System on Chip) solutions for STB, BluRay and HD DVD, TV and various consumer devices that benefit from hooking into an IP video network.
"IPTV is an IP video network and, as a result of IPTV, we are putting these sorts of video networks in our homes. Roughly 77% of SIGM's sales last quarter were into IPTV STB applications.
"To give you an idea the magnitude of this recent surprise, SIGM's revenue for Q3 of this year (the October quarter) is closer to the forecasts most analysts had for Q4 next year than it was to what they were forecasting for the quarter just closed.
MOST NOTEWORTHY: Athenahealth, Brocade Communications Systems, Royal Bank of Scotland and Human Genome were today's noteworthy initiations:
Caris initiated shares of Athenahealth (NASDAQ: ATHN) with an Average rating and $26 target, as they believe an unachievable growth rate is priced into shares at current levels.
MOST NOTEWORTHY: Sigma Designs, Satyam and Genpact were today's noteworthy initiations:
Deutsche Bank initiated shares of Sigma Designs (NASDAQ: SIGM) with a Buy rating and $62 target, as they believe the company can maintain its leadership position in the fast-growing IPTV and high-def DVD markets. Baird said Sigma's IPTV momentum is accelerating, Blu-ray demand in strong, and Ultrawideband is the next growth opportunity. The firm resumed coverage with an Outperform rating.
MOST NOTEWORTHY: Gander Mountain, Lev Pharmaceuticals, Intermune, Aetna and Medco Health were today's noteworthy initiations:
Nollenberger initiated shares of Gander Mountain Company (NASDAQ: GMTN) with a Sell rating and $5.00 target, and believes the company's goal of reaching profitability in 2007 could prove overly optimistic.
Lev Pharmaceuticals (OTC: LEVP) was initiated with a Sector Outperformer rating and $3 target at CIBC, as the firm believes Cinryze will likely be approved in 1Q08 and they expect the company to have significant pricing leverage.
JP Morgan resumed coverage of Intermune Inc (NASDAQ: ITMN) with an Overweight rating and expects shares to be driven by the company's pipeline in IPF and HCV.
Aetna Incorporated (NYSE: AET) was initiated with an Outperform rating at Wachovia. The firm feels Aetna is positioned for better growth and higher quality earnings than its peers.
William Blair started shares of Medco Health Solutions Inc (NYSE: MHS) with an Outperform rating, as they believe an aging population, rising health care costs, and an acceleration in new product introductions should increase demand for PBM services over the next five years.
MOST NOTEWORTHY: Wal-Mart (WMT), Coldwater Creek (CWTR), Select Comfort (SCSS) and Anadys Pharma (ANDS) were today's noteworthy downgrades:
Merrill downgraded Wal-Mart (NYSE: WMT) to Sell from Neutral citing expectations of margin erosion.
Brean Murray cut Coldwater Creek (NASDAQ: CWTR) to Hold from Buy following their disappointing Q2 report and outlook.
Select Comfort (NASDAQ: SCSS) was cut to Strong Sell from Hold at Matrix based on weak performance and high risk characteristics.
Anadys Pharma (NASDAQ: ANDS) was downgraded to Neutral from Outperform at Cowen, citing pipeline setbacks over the last 12 months, and lack of near-term catalysts...
MOST NOTEWORTHY: CKE Restaurants (CKR), Capella Education (CPLA), IAC/InterActiveCorp (IACI), Liberty Media (LINTA) and BWAY Holding (BWY) were today's noteworthy initiations:
JP Morgan started CKE Restaurants (NYSE: CKR) with a Neutral rating, citing near-term margin concerns.
Barrington believes Capella Education (NASDAQ: CPLA) is one of the fastest growing companies within its group in every aspect including enrollment, earnings and revenue.
Stifel started IAC/InterActiveCorp (NASDAQ: IACI) with a Buy rating, believing there is a 60% chance of a material event occurring within the next 6 months. Stifel believes QVC is the best interactive retailing operator given its 22% EBITDA margins and 16% operating margins.
Banc of America initiated BWAY Holding (NYSE: BWY) with a Neutral rating, citing a balanced risk/reward. JP Morgan started shares of BWY with an Overweight rating on valuation...
MOST NOTEWORTHY: Dominion Resources (D), Syniverse Holdings (SVR), Research in Motion (RIMM), Verizon Communications (VZ) and Comcast (CMCSA) were the noteworthy upgrades today:
Jefferies upgraded shares of Dominion Resources (NYSE: D) and raised their target to $90 from $68 as the firm believes shares are fairly valued based on assumed higher spark spreads in New England.
Syniverse Holdings (NYSE: SVR) was raised to Peer Perform from Underperform at Bear Stearns after its Q1 report.
Credit Suisse upgraded Research in Motion (NASDAQ: RIMM) and raised their target to $145 from $100 as the firm believes the company will benefit from smart phone market growth and improving international traction. However, FBCO still believes RIMM's increasing exposure to the consumer market will continue to pressure margins.
Prudential said Verizon Communications (NYSE: VZ) is showing signs of improving revenue growth and accelerating FiOS TV subscriber additions, as well as continued dominance in wireless, and upgraded shares to Neutral from Underweight.
Matrix USA raised Comcast Corp's (NASDAQ: CMCSA) rating to Hold from Sell on valuation...
OTHER UPGRADES:
Goldman upgraded Danaher Corp (NYSE: DHR) to Buy from Neutral with an $81 target.
NTT DoCoMo (NYSE: DCM) was upgraded to Outperform from Neutral at Credit Suisse.
Bear Stearns raised Ingersoll-Rand's (NYSE: IR) rating to Peer Perform from Underperform.
Needham upgraded Sigma Designs (NASDAQ: SIGM) to Buy from Hold with a $28 target.
Wachovia raised Innkeepers USA Trust (NYSE: KPA) rating to Market Perform from Underperform.
Results for the tech stocks in last week's preview were a mixed bag, some beats, some misses, some in line. By and large, expectations for tech companies reporting results this week remain high, though. Here's what analysts surveyed by Thomson Financial are anticipating in the way of earnings, as compared to the same period of the previous year. 
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I don't care to try to predict if we're heading into recession or how bad that recession will be. I have no idea where the market will bottom or how long it will take to get there; the one thing I do know is that stocks are going to continue to get wrecked, whether or not we have a short-term bounce. Amazingly, it's been just eighteen days since I warned investors the market would drop 10% in 2008 and now we're already there. I've considered buying quality growth stocks like 
Update: See the latest posts about 
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