The earnings crunch begins in earnest this coming week, with companies from Johnson & Johnson (NYSE: JNJ) and PepsiCo Inc. (NYSE: PEP) to Southwest Airlines Co. (NYSE: LUV) and Harley-Davidson Inc. (NYSE: HOG) scheduled to report results for the quarter just ended. But with the ongoing turmoil in the markets, much attention is on the tech and financial sectors. This week will provide plenty to mull over on both counts.
Wall Street expectations for tech stocks are fairly optimistic. Analysts surveyed by Thomson Financial are looking for chip maker Altera Corp. (NASDAQ: ALTR) and software/service company iGate Corp. (NASDAQ: IGTE) to be the sector's biggest earnings gainers of the week. Altera is expected to report earnings of 30 cents per share (up 33.3% from a year ago) on revenue of $355.1 million. Altera had previously forecast flat sales for the quarter, and shares fell to a 52-week low last week. iGate is expected to report earnings of 14 cents per share (up 42.9%) on revenue of $55.6 million. India-based iGate recently spun off its Mastech consulting services. Shares are down 45.0% in the past three months, and also reached a new 52-week low last week.
San Jose-based Novellus Systems Inc. (NASDAQ: NVLS), on the other hand, is expected to report that net income tumbled 90.4% from a year ago to 4 cents per share, on revenue of $245.6 million. Novellus fell to a 52-week low early last week, and shares are down 44.5% year to date.
As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.
Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.
Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
This morning, Novellus Systems Inc (NASDAQ: NVLS) announced that it anticipates second quarter bookings, shipments, revenues and earnings per share to come in at the low end of the guidance range it previously provided on May 31st. The semiconductor equipment maker previously forecast Q2 results of 42c-45c/$410M-$420M vs. Reuters consensus of 44c/$415.61M.
The company, which makes equipment to help turn silicon wafers into computer chips, believes its earnings will be lower because of a weak semiconductor market. Novellus said theses industry declines will lead to cost cutting initiatives in the second half of the year, including a reduction in executive salaries for the rest of the year and company shutdowns in the third and fourth quarters.
Novellus is one company among several that have lowered expectations for the rest of the year. Due to a surplus in chips, companies have had to cut prices. Applied Materials Inc (NASDAQ: AMAT), for example, also predicts declines in global chip sales growth for the rest of 2007.
In the technology sector this morning, the profit warning from Novellus was offset by an upgrade of Intel Corporation (NASDAQ: INTC) by Lehman Brothers.
MOST NOTEWORTHY: CheckFree Corp (CKFR), Sprint Nextel Corp (S) and the semiconductor capital equipment sector were some of today's more noteworthy downgrades:
Piper Jaffray downgraded Checkfree Corp (NASDAQ: CKFR) to Market Perform from Outperform after transferring coverage of the payment processor company.
Sprint Nextel Corp (NYSE: S) was cut to Outperform from Strong Buy at Raymond James.
ThinkEquity cut Jones Soda Co (NASDAQ: JSDA) to Source of Funds from Buy based on valuation.
Goldman is now cautious on the biofuel sector, downgrading the group to Cautious from Neutral.
William Blair downgraded shares of Medimmune, Inc (NASDAQ: MEDI) to Market Perform from Outperform.
Credit Suisse downgraded shares of Big 5 Sporting Goods Corp (NASDAQ: BGFV) to Underperform from Neutral citing valuation.
Wachovia dropped Inkeepers USA Trust (NYSE: KPA) to Underperform from Outperform based on the acquisition from Apollo Investment Corp (AINV). Citigroup cut Inkeepers to Hold from Buy.
Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.
U.S. stocks closed mixed Monday, as General Electric Company (NYSE:GE) and Citigroup Inc. (NYSE:C) rallied to new multi-year highs. The Dow closed down -0.10%, NASDAQ 100 closed down -0.90%, and S&P 500 closed down -0.35%. The 10-year bond rate stood at 4.5870%. The CBOE VIX closed up 0.68 to 10.73.
Research in Motion Option Implied Volatility Increased To 59 Into Dec. 21 Earnings
Research In Motion (NYSE:RIMM) is expected to report EPS of 93 cents on December 21, 2006. Oppenheimer said "We rate the shares of RIMM Neutral, due to concerns over valuation and the potential long-term impact of competition in the smart phone segment. However, we expect that the company's November & February quarter earnings will be robust, based upon our recent channel checks." RIMM's overall option implied volatility of 58 is above its 26-week average of 41, according to Track Data, suggesting larger risks.
Harrah's Implied Volatility Collapses As Official Deal Announcement Nears
Dow Jones reported a source who indicated that Harrah's Entertainment Inc. (NYSE:HET) would accept a $90 share bid from private equity. HET overall option implied volatility 12 is below last week's level of 18 according to Track Data, suggesting decreasing price risks.
Option volume leaders Monday were: Novellus Systems (NASDAQ:NVLS), Altria Group Inc. (NYSE:MO), Oracle Corp. (NASDAQ:ORCL), and Harrah's.
Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.
U.S. stocks rallied to another record high Friday as General Electric Co. (NYSE:GE) led the rally, closing at a 4 1/2- year high of $37.46. The Dow Jones rallied to another all-time record. The Dow closed up 0.23%, NASDAQ 100 closed up 0.14%, S&P 500 gained 0.10%, and the 10-year bond rate closed at 4.5970%. The CBOE VIX closed at 10.05.
Morgan Stanley's Option Implied Volatility Calm Into 12/19: EPS & Outlook
Morgan Stanley (NYSE:MS), which closed Friday down 34 cents to $79.46, operates its business through four segments: retail brokerage, asset management, institutional securities and the Discovery Card network with 50 million card members & 4 million merchant/cash access locations. MS is expected to report EPS of $1.77 on Dec 19. MS option implied volatility of 25 is near its 26-week average, according to Track Data, suggesting non-directional price risk.
FedEx Option Implied volatility Calm into 12/20: EPS & Outlook
FedEx (NYSE:FDX), which closed Friday up 9 cents to $115.06, is expected to report EPS of $1.75 on Dec. 20. FDX's earnings are expected to benefit from lower fuel prices, which have decline from near-record highs this summer. FDX January option implied volatility of 24 is near its 26-week average of 26, according to Track Data, suggesting non-directional price risk.
Novellus Implied Volatility Calm As Stock Rallies
Novellus (NASDAQ:NVLS), which closed Friday up 97 cents to $34.36, develops, manufactures, sells and supports equipment used in the fabrication of integrated circuits. NVLS January option implied volatility of 37 is near its 26-week average, according to Track Data, suggesting non-directional price fluctuations.
Option volume leaders Friday were: General Electric Co. (NYSE:GE), Research in Motion Ltd. (NASDAQ:RIMM), Cisco Systems (NASDAQ:CSCO), and Microsoft Corp. (NASDAQ:MSFT).
The earnings crunch begins in earnest this coming week, with companies from Johnson & Johnson (NYSE: JNJ) and PepsiCo Inc. (NYSE: PEP) to Southwest Airlines Co. (NYSE: LUV) and Harley-Davidson Inc. (NYSE: HOG) scheduled to report results for the quarter just ended. But with the ongoing turmoil in the markets, much attention is on the tech and financial sectors. This week will provide plenty to mull over on both counts.
As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from 
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