This Chip Company Warned — Who’s Next?

June 24, 2003
Vincent Mao

Stocks
were mixed Tuesday, with blue
chips outperforming tech issues. The Dow and S&P edged higher while the Nasdaq
closed
in the red. A better-than-expected reading in consumer confidence failed to
inspire buyers — the morning selloff came right at the announcement — as investors are waiting for the results of the two-day FOMC
meeting beginning today. Though many expect the Fed to ease, the debate
continues on whether it will be a 1/4 or 1/2 point. More
important than the actual cut will be the Fed’s bias and view of the economy. Tech
stocks were the biggest losers today after chip maker Advanced Micro Devices
(
AMD |
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lowered its second-quarter revenue targets due to SARS. Soundview’s downgrade of
Cisco Systems
(
CSCO |
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PowerRating) also dragged down tech stocks. Bonds were higher
today, continuing to rally out of their recent pullback. Gold fell to a six-week
low

In economic news, the Bank of
Tokyo-Mitsubishi/UBS retail chain store sales gained 0.6% last week. This was
the biggest gain in seven weeks. Consumer confidence in June slipped to 83.5
from last month’s revised 83.6. Economists were looking for a reading of 82.4.

The 10-year U.S. Note
was +125 at 119 085.

The dollar was +0.37 at
94.84.

Gold was -7.90 at 347.30.

Crude Oil -0.33 at
28.84.

Volume was
1,391,718,000
on the NYSE, and 1,610,085,000 on the Nasdaq.

Market breadth was mixed,
with NYSE advancing issues over declining issues by a ratio of 1.13, and up
volume over down volume by a 1.17 ratio. Nasdaq advancing issues over advancing
issues at 1.05, and down volume over up volume is at a 1.95 ratio.

Top Dow stocks were:

Stocks in the news:

American Greetings
(
AM |
Quote |
Chart |
News |
PowerRating)
was higher after reporting better-than-expected first-quarter results.
The greeting card maker reported earnings of 27 cents a share or 2 cents better
than analysts estimates. However the results were down from 60 cents a share for
the same period a year ago. The company is projecting a loss of 13 to 18 cents
next quarter.

Apple Computer
(
AAPL |
Quote |
Chart |
News |
PowerRating)
slid slightly after Merrill Lynch upgraded the stock from “sell” to
“neutral”. Late yesterday Apple unveiled its new G5 PowerMacs which Merrill
feels will help Apple’s sales when it ships in August.

Kroger
(
KR |
Quote |
Chart |
News |
PowerRating) was higher after the company reported first-quarter results of 46 cents a share
compared to 40 cents a share during the same period a year ago. Results topped
estimates by a penny. Looking ahead, the company sees full year results between
$1.55 and $1.63 compared to estimates of $1.62 a share.

Netflix
(
NFLX |
Quote |
Chart |
News |
PowerRating) rose on very heavy volume. The shares jumped after the U.S. Patent &
Trademark Office granted the company a patent for its online DVD rental
service.

Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating)
was lower after Soundview downgraded the stock from “outperform” to
“neutral”. Soundview based the downgrade on valuation and the lack of evidence
that business has improved.

Advanced Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating)
was lower after the company warned that second-quarter revenues will fall short
of estimates. The company now expects revenues of $615 million down from
previous estimates of $715 million. Advanced Micro said that weak sale in China
due to the SARS epidemic negatively impacted sales.

Pediatrix Med Group
(
PDX |
Quote |
Chart |
News |
PowerRating)
tumbled almost $10/share after the company announced that the US Attorney’s
Office is investigating its billing practices.

vincentm@tradingmarkets.com

This Chip Company Warned — Who’s Next?

BUY THE FEAR, SELL THE GREED

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