Tech Stock News And Analysis

Tech Stock News and Analysis

Friday, August 18, 2006

Shares of Marvell Technology Group Ltd. dropped about 7 percent Friday after it said on Thursday that its second quarter revenue would fall short of expectations.

The Santa Clara-based chipmaker (NASDAQ MRVL) said an internal investigation of its stock option practices prevented a full report on its second quarter performance, which is likely to miss its scheduled Sept. 12 extended filing date.

The $574 million in revenue reported on Thursday was 47 percent more than the $390.5 million in the year-ago period, but short of the $583 million projected by analysts surveyed by Thomson First Call.

Marvell also projected sales would be between $2.27 billion and $2.29 billion, below its prior guidance of between $2.37 billion and $2.43 billion. Analysts had forecast $2.4 billion.

Its stock dropped as low as $18.53 on Friday, down about 9.5 percent, before closing at $19.05. It has lost nearly half of its value since hitting a 52-week high of $36.83 in January.

Friday, August 11, 2006

Charter Communications to Swap Up to $875 Million in Debt, Also Plans Note Exchange

Charter Communications Inc., the nation's third-largest cable operator, said Friday it will sell up to $875 million of debt via private placements to extend its debt maturities and trim its overall debt load.

Shares of the St. Louis-based company rose 9.1 percent, or 11 cents, to $1.32 Friday morning on the Nasdaq. The stock has traded between 88 cents and $2 over the past year.

Microsoft Corp. co-founder Paul Allen controls about 90 percent of the company's voting shares.

Charter said its CCH II subsidiary is offering to issue up to $200 million of new 10.25 percent senior notes due 2013, and CCH I is offering to issue up to $675 million of 11 percent senior secured notes due 2015, in exchange for up to any Charter notes with maturities ranging from 2009 through 2012.

The offers are made only to qualified institutional buyers and to certain non-U.S. investors located outside the United States.

In addition, Charter said it will offer to swap up to $450 million of its outstanding 5.875 percent senior convertible notes due 2009 for up to $188 million in cash, up to 45 million of its common shares, and up to $146.3 million of CCH II's 10.25 percent senior notes due 2010.

Thursday, August 10, 2006

Relieved investors sent ADC Telecommunications Inc. shares up Thursday after the broadband maker said it terminated its plan to buy Andrew Corp., which sent shares of the coaxial cable maker lower.

In May, broadband equipment maker ADC agreed to give Andrew shareholders .57 of a share of ADC for each Andrew share in a deal valued at about $1.6 billion. However, since the offer, shares of the Eden Prairie, Minn.-based ADC slipped about 35 percent, making the deal less lucrative for Andrew shareholders. The companies agreed to terminate the deal late Wednesday.

Westchester, Ill.-based Andrew also rejected an unsolicited rival bid issued Monday from CommScope Inc. for $1.51 billion in cash and assumption of $186 million in debt, calling the offer "wholly inadequate." Hickory, N.C.-based CommScope makes cable for data, voice and video transmission.

Baird U.S. Equity Research analyst Kenneth W. Muth called the outcome "satisfactory for all companies involved." He said Andrew will pay ADC $10 million in breakup fees and will pay an additional $65 million if Andrew merges with another company within one year.

The analyst said Andrew posted third-quarter results July 27 that show better revenue and margins, though he's concerned that the company's price increases won't offset higher costs for copper. Muth reiterated a "Neutral" rating on Andrew's stock.

Jefferies & Co. analyst Bill Choi reiterated a "Hold" rating on Andrew and also called the deal "untenable." He said he does not expect CommScope or another bidder to try to acquire Andrew.

Jefferies analyst George C. Notter maintained a "Hold" rating on ADC shares and said the termination of the deal was the right choice for the company due to merger risks. He also noted that the company was better off terminating the deal rather than increasing the offer since its share price declined so much.

"Although the transaction was reasonable strategically, the deal's viability came into question as ADC's share price rapidly eroded," he wrote, a situation that was amplified by the company's profit warning issued in late July. The "superior" CommScope offer gave ADC an "out," wrote Notter.

Shares of ADC Telecommunications jumped $1.22, or 9.6 percent, to $13.87 in afternoon trading on the Nasdaq. The stock has traded between $11.81 to $27.90 and is down about 35 percent since making its acquisition announcement May 31 to a Wednesday close at $12.65.

Andrew shares fell 81 cents, or 8.5 percent, to $8.74, on the Nasdaq with quadruple its average daily trading volume. The stock has traded between $7.08 to $14.25 in the past 52-weeks and is down about 11 percent since the beginning of the year.

CommScope fell 23 cents to $27.94 on the New York Stock Exchange.

Wednesday, August 09, 2006

Shares of Cisco Systems Inc. jumped 14 percent Wednesday, a day after the network-equipment maker reported a gain in fiscal fourth-quarter profit and issued a bullish outlook.

Executives predicted sales in the new fiscal year would grow 15 to 20 percent over fiscal 2006. They predicted year-over-year revenue growth of 19 to 21 percent in the current quarter.

"We believe our vision, strategy and execution are in great shape as we enter 2007," Cisco CEO John Chambers said Tuesday.

Net income for the three months ended July 29 was $1.544 billion, or 25 cents per share, compared with 1.540 billion, or 24 cents per share, in the fiscal fourth quarter of 2005.

The latest results would have shown an increase of nearly 22 percent in net income, except for $152 million in compensation expenses related to employee stock options and employee stock purchases. Had those accounting changes been in place last year, Cisco would have reported fiscal fourth quarter profit of $1.27 million, or 20 cents per share, in 2005.

Quarterly sales at Cisco, one of the world's largest makers of routers, switches and other devices that connect computers to the Internet, rose to $7.98 billion from $6.6 billion in the same quarter of 2005. The San Jose, Calif.-based company also produces digital subscriber line and cable broadband equipment, Internet telephone products and network management software.

"The growth and profitability are impressive, particularly since the overall market hasn't been stellar," said Barry Jaruzelski, vice president of the communications and technology practice at Booz Allen Hamilton. "It's not shabby in an absolute sense, either. It's a pretty positive story."

Cisco stock rose $2.49, or 14 percent, to close at $19.78 Wednesday on the Nasdaq Stock Market.

Cisco also has managed to stay above the stock-options backdating scandal that has gripped at least 80 companies nationwide, including rival Juniper Networks Inc. The companies are investigating whether they retroactively pinned the option's exercise price to a low point in the stock's value -- a practice that makes the rewards more lucrative. If companies backdate options without accounting for the move, it can cause profits to be overstated and taxes to be underpaid. It also exposes companies to possible fraud charges.

"Given the recent attention to this issue, Cisco thoroughly reviewed its issuance of stock option grants and can state with confidence that we did not change stock option grant dates to give a lower exercise price," said Chief Financial Officer Dennis Powell.

Excluding options and other expenses, Cisco earned $1.9 billion, or 30 cents per share, compared with $1.6 billion, or 25 cents per share in the fiscal fourth quarter of 2005. On that basis, which doesn't conform to generally accepted accounting principles, Cisco easily surpassed the mean estimate of 28 cents per share, or $1.76 billion on sales of $7.92 billion, according to a survey of analysts by Thomson Financial.

Cisco earned $5.6 billion, or 89 cents per share, in the 2006 fiscal year on sales of $28.5 billion. Excluding special expenses, Cisco earned $6.9 billion, or $1.10 per share for the year. Wall Street was expecting the company to earn $6.74 billion, or $1.08 per share, on annual sales of $28.42 billion.

The company also said it is taking on a challenge that may be more formidable than pleasing Wall Street: It plans a consumer advertising push aimed at getting average Internet users -- not software programmers and hardware administrators -- to recognize and even embrace the brand.

"The goal is to have a strong brand image with the consumer that makes them think about how we change their life experience," said Chambers, who emphasized that the campaign would not be a "technical, geeky thing" but an idea that resonates with the average consumer. "Cisco is the gateway to your future."

Making Cisco accessible to non-technophiles is a tall order. The company is one of the world's largest makers of routers, switches and other devices that connect computers to the Internet. In 2003, it acquired Linksys, which is now the company's home networking division. In February, Cisco completed the $6.9 billion acquisition of Scientific-Atlanta Inc., the No. 2 seller of cable television boxes after Motorola Inc.

Tuesday, August 08, 2006

Cisco Systems Beats Wall Street Estimates With Flat Earnings for Fourth Quarter

Networking gear provider Cisco Systems Inc. exceeded Wall Street estimates Tuesday with fiscal fourth-quarter profit that was almost the same as in the year-ago period, before the company introduced significant accounting changes.

Net income for the three months ended July 29 was $1.544 billion, or 25 cents per share, compared with $1.540 billion, or 24 cents per share, in the fiscal fourth quarter of 2005.

The newest results would have shown an increase of nearly 22 percent in net income, except for $152 million in compensation expenses related to employee stock options and employee stock purchases. Had those accounting changes been in place last year, Cisco would have reported fiscal fourth quarter profit of $1.265 million, or 20 cents per share, in 2005.

Quarterly sales at Cisco, one of the world's largest makers of routers, switches and other devices that connect computers to the Internet, rose to $7.98 billion from $6.6 billion in the same quarter of 2005. The San Jose, Calif.-based company also produces digital subscriber line and cable broadband equipment, Voice over Internet Protocol telephone service products and network management software.

Cisco President and Chief Executive John Chambers called the earnings "awesome." He credited the 20 percent increase in the number of salespeople in developing countries -- particularly Asia -- for delivering a 21 percent gain in quarterly revenue worldwide.

Orders for Cisco gear in China grew 40 percent from the same period in 2005. Orders remained flat in the United Kingdom and increased less than 20 percent in the United States, which constitutes roughly 45 percent of Cisco's business, Chambers noted in a conference call.

"Asia-Pacific continues to remain solid," Chambers said during a conference call, noting that the company's impressive revenue growth would continue throughout 200, "barring some major surprises in these developing countries."

Executives were so bullish that they predicted revenue in 2007 would grow 15 percent to $9.18 billion.

"We believe our vision, strategy and execution are in great shape as we enter 2007," Chambers said.

Executives were also upbeat Tuesday because Cisco has managed to stay above the stock-options "backdating" scandal that has gripped at least 80 companies nationwide, including Cisco rival Juniper Networks Inc. The companies are conducting investigations to determine whether they retroactively pinned the option's exercise price to a low point in the stock's value -- a practice that makes the rewards more lucrative. If companies backdate options without accounting for the move, it can cause profits to be overstated and taxes to be underpaid. It also exposes companies to possible fraud charges.

"Given the recent attention to this issue, Cisco thoroughly reviewed its issuance of stock option grants and can state with confidence that we did not change stock option grant dates to give a lower exercise price," said Chief Financial Officer Dennis Powell. "We are very comfortable with our accounting for stock options and stand behind all of our financial statements as reported."

The $6.9 billion acquisition of Scientific-Atlanta Inc., which was completed in February, contributed $582 million to sales in the most recent quarter. Scientific-Atlanta, the world's second-largest seller of cable television boxes after Motorola Inc., also specializes in broadband services such as digital content distribution systems.

Excluding options and other expenses, San Jose, Calif.-based Cisco earned $1.9 billion, or 30 cents per share, compared with $1.6 billion, or 25 cents per share in the fiscal fourth quarter of 2005. On that basis, which doesn't conform to generally accepted accounting principles, Cisco easily surpassed the mean estimate of 28 cents per share, or $1.76 billion on sales of $7.92 billion, according to a survey of analysts by Thomson Financial.

Cisco earned $5.6 billion, or 89 cents per share, in the 2006 fiscal year on sales of $28.5 billion. Excluding special expenses, Cisco earned $6.9 billion, or $1.10 per share for the year. Wall Street was expecting the company -- whose clients include Silicon Valley startups to government agencies and multinational corporations such as DaimlerChrysler AG -- to earn $6.74 billion, or $1.08 per share, on annual sales of $28.42 billion.

The results were released after financial markets closed. Cisco shares lost 12 cents, less than 1 percent, and finished the regular session at $17.29 on the Nasdaq Stock Market. The stock gained 82 cents in after-hours trading.

Saturday, August 05, 2006

Oplink Communications Shares Jump After Company Reports More Than Twofold Increase in 4Q Profit

Shares of Oplink Communications Inc., a provider of optical manufacturing, design and integration services, rocketed in afternoon trading on Friday after the company reported a surge in its fiscal fourth-quarter profit.

Income for the quarter was $1.9 million, or 9 cents per share, up from $868,000, or 4 cents per share, last year. Revenue for the quarter was $16.9 million, up 90 percent from $8.9 million last year.

Needham analyst John Harmon raised 2007 earnings estimates to 65 cents per share from a previous estimate for 55 cents per share, and lifted his sales forecast to $80.9 million from $74 million. Analysts polled by Thomson Financial expect earnings of 60 cents per share on $75.7 million in sales for 2007.

"We believe Oplink's formula for above-market growth rates can continue for at least several more quarters," Harmon wrote in a note to clients.

Merriman Curhan Ford analyst Tim Savageaux, who has a "Neutral" rating on the stock, wasn't quite as hopeful. In a note to clients Savageaux noted that the company generated the majority of its earnings from interest income versus operating income, and said he'd hold off on aggressively buying the stock until the company could fatten up its operating profit.

Shares of Oplink, which have traded between $9.59 and $20.55 over the last year, were up $1.59, or 10.7 percent, at $16.40 in afternoon trading on the Nasdaq.

Friday, August 04, 2006

Cbeyond 2Q Profit Jumps, Driven by New Customers, Higher Sales

Shares of Atlanta-based Cbeyond Inc., which provides broadband Internet access for small businesses, soared in Friday afternoon trading, after the company reported a second-quarter profit, and analysts applauded the results.

The stock jumped $3.41, or 19 percent, to $21.31 on the Nasdaq, after earlier changing hands as high as $23.54. In the past 52 weeks, the stock has traded in a range of $9.45 to $24.80.

Late Thursday, Cbeyond reported profit of $1.4 million, or 5 cents per basic share, against a loss of $3.4 million in the year-ago period, when the company was still privately held. Cbeyond did not provide earnings per share figures on a diluted basis.

Revenue rose nearly 38 percent to $52.5 million from $38.2 million a year ago.

Wall Street expected a loss of a penny a share on sales of $50.4 million, according to a poll of analysts by Thomson Financial.

The 2006 second quarter included a $900,000 gain and $1.3 million in stock-based compensation expenses.

Adjusted earnings excluding interest, taxes, depreciation and amortization were $9.4 million, compared to $5.8 million in the second quarter of 2005.

Cbeyond raised its 2006 revenue guidance to at least $212 million from a minimum of $206 million. That's above the Wall Street average forecast of $208.8 million, according to Thomson Financial.

Analyst Frank G. Louthan of Raymond James raised his rating on the shares to "Strong Buy" from "Market Perform" and upped his price target on the stock to $25, calling the results "impressive."

"We view Cbeyond's application development capabilities as crucial to differentiating itself in the competitive marketplace, and believe recent trends indicate the company is successfully executing its strategy of developing new applications to meet customer demand," Louthan said, noting that applications per customer increased 5 percent during the quarter.

Looking ahead, Louthan also expects the percentage to balloon as the company rolls out new applications and wireless services.

Louthan hiked his 2006 earnings per share figure to a profit of 17 cents from a loss of 5 cents, and his revenue estimate to $213.5 million from $206.5 million, respectively.

ThinkEquity analyst Jonathan Hoopes reiterated a "Buy" rating and $30 price target. "Cbeyond's strong execution has accelerated the company's expansion efforts, as management indicated it plans to further expand into a third new market in 2007 relative to our expectation for two additional markets," Hoopes said in a client note.

Merriman Curhan Ford analyst Colby Synesael called the stock undervalued and raised his 2006 revenue estimate to $215.7 million from $209.4 million, with 2006 sales of at least $212 million. For 2007, Synesael expects revenue of $284.3 million, up from a previous call of $275.8 million.

"Although we believe we are properly reflecting the addition of a third market, our estimates may prove too conservative." Synesael said. He kept a "Buy" rating on the stock.

Thursday, August 03, 2006

Cogent Plummets on 2Q Earnings Miss, but Analysts Give Mixed Reviews on Company's Future

-- Shares in Cogent Inc., a maker of fingerprint identification systems for law enforcement agencies, plummeted Thursday to a new 52-week low after the company's earnings declined, badly missing Wall Street expectations.

Cogent recently traded down $2.36, or 17 percent, to $11.34 on the Nasdaq. Earlier in the session, the stock bottomed at $10.11, sharply lower than its previous 52-week nadir of $13. A year ago, the stock listed at $33.

Cogent blamed the earnings decline -- 75 percent to $3.6 million, or 4 cents per share -- on expected revenue that was delayed until the second half of the year. That sent sales down by two-thirds to $13.2 million. On an adjusted basis, the company earned 5 cents per share. Analysts were looking for earnings of 10 cents per share, marking the second quarter in a row Cogent disappointed the Street.

Needham analyst Richard Davis downgraded the stock to "Underperform" from "Hold," citing concerns about future revenue.

"The combination of two consecutive shortfalls, our reduced visibility, and the potential for future negative earnings revisions is our reasoning," the analyst wrote.

But other analysts remain bullish on the stock, citing valuation and the potential for future demand.

Jefferies & Co. analyst Matthew McKay upgraded Cogent to "Buy" from "Underperform" despite the miss. "We learned the company has won over $10 million of additional smaller contracts, of which some can likely be recognized as revenue in 2006," he wrote in a note to investors Thursday. "While the perceived risk is quite high at the moment, we believe buying COGT... is an excellent value."

PacificCrest said the company's overdependence on a few key contracts "was severely exposed during Q2." Analyst Rob Owens lowered his price targets for the company, but reiterated his "Outperform" rating, saying, "While it is evident that the massive pipeline is not translating into near-term revenue, we continue to believe Cogent is in front of a massive inflection in demand."

Wednesday, August 02, 2006

CheckFree Corp.'s stock plunged 21 percent in after hours trading on Tuesday after it said customers skipped payments in the latest quarter and posted earnings two cents below analysts' estimates.

CheckFree Chief Executive Pete Kight said in a call to investors that transactions at the company's electronic commerce division had been "soft" in the latest quarter, particularly in April.

CheckFree makes software for online bill-paying and handles bill-payers both electronically and for walk-ins.

He blamed a temporary disruption at its biggest bank customer, fewer billing cycles in that month and reduced walk- in customers.

"Skippers -- people who skip payments -- were clearly up in a tax quarter," said Kight.

He speculated that a high percentage of credit card payments may have been delayed.

Chief Financial Officer David Magnum admitted CheckFree was "surprised" by the April slowdown, but forecast growth would improve in fiscal 2007, based on better results in July.

Atlanta-based CheckFree, which serves more than 1,500 businesses and organizations, said its "underlying earnings," which exclude some acquisition expenses and related tax benefits, were $36.5 million, or 39 cents a share, unchanged from a year earlier.

On that basis, 19 analysts polled by Reuters had on average expected the company to earn 41 cents a share.

Net income rose to $29.4 million, or 31 a share, compared with $11.9 million, or 13 cents a share, in the year-ago quarter.

For fiscal 2007, CheckFree expects earnings of $1.58 to $1.62 a share and $1.90 to $1.94 on an underlying basis, representing 10 percent to 13 percent growth over the 2006 fiscal year.

Revenue was $224.9 million, a 12 percent increase over the year earlier period, when it was $201 billion.

CheckFree's shares fell 21.1 percent, or $9.08, to $34.05 after the close of regular trading. The share closed at $43.13, down $1.37, or 3.1 percent on the Nasdaq market, near the low end of its range for 2006. It traded as high as $56.50 earlier this year.

"We are frustrated and we're going to get to the bottom of it," said Kight.