Market briefing---Matt (slow)
Conference call---Carmen (fast)
NYSE---Deb (fast)
Currency
Interview: Credit Suisse First Boston--- Bonanca, Jason--- Currency Strategist
>> welcome to “world financial report.” i’m matt nesto. as i said, shares of applied materials are rising in extended trading right now after the company said it earned its first net profit in a year. orders twose as much as analysts expected, but it was a difficult quarter in terms of earnings for the world’s biggest maker of semiconductor equipment. fiscal fourth-quarter profit fell 89% from a year ago to $15.5 million, a penny a share. carmen roberts has been monitoring the ongoing conference call and joins was the latest. carmen?
>> matt, thank you. applied materials returned a profit by cutting jobs and closing plants, but orders were on the rise and the tone during the conference call was upbeat. michael splinter, the new c.e.o. at applied materials, said he believes the fourth quarter was a turning point for the chip equipment industry. he says there was a marked change in customers’ attitudes and applied materials or amat, as it’s often called, will see an improved business environment. investors are getting a fresher look at the chip equipment industry.
>> what’s happened is we finished up the september quarters with all its peers. applied as an october quarter, so now we get essentially a mid quarter update on how the industry is doing. what we have heard is that since the end of september, the industry has accelerated dramatically in terms of order intake.
>> and applied materials confirmed orders are, indeed, growing. they’re up by double-digits. orders rose 21% in the third quarter more than doubling that of analysts in. and lehman brothers’s edward white. amat says it expects orders in 2004 to rise 20% from the fourth-quarter level of 1.28 billion. it also expects revenue to rise 5% to 8% and for profit to be up 6% to 8% fending on sales. those rising orders may hope amat top 2004 earnings estimates by five to 10 cents a share. if so, the price-to-earnings ratio may drop to the mid 40’s from the current estimate of 55. that is an improvement especially over the fiscal 2003 194 p/e. the stock may still be considered expensive. some analysts say the expected improvement in business has already priced in. better times are ahead for the company and as lehman brothers says in a note to clients, it expects amat to be one of the primary beneficiaries of business spending in 2004. so, be sure to be tuned in tomorrow morning at 10:10 new york time when amat, applied materials, c.e.o. michael splinter joins us for more insight into the semiconductor industry. matt, back to you.
>> all right. busy late afternoon from carmen roberts. great job. thanks for that. medtronic also released earnings after the close of trading and better to give us the latest lowdown, we have deborah kostroun at the nyse.
>> hey, matt. looking at medtronic, this is the world’s biggest maker of pacemakers saying their fiscal second-quarter profit rising 58% as they sold more heart devices, net income coming in at 39 cents a share. that is in line with the thomson financial estimate of 39 cents. you can see how it’s doing in after-hours trading, up just slightly. compare that 39-cent quarter number we got to last year when it was 25 cents. however, interesting things coming out about medtronic. this is their seals of implantable defibrillators, pacemakers and other heart devices topping with revenue. and medtronic said late today they would buy closely held vertelink corporation to add products to its division. and in addition they’re saying they’ll repurchase about 30 million shares. medtronic is year to date down 2%. when you compare that to the s&p health quare equipment index, which is actually higher for the year, so medtronic really kind of lagging in comparison to the healthcare equipment index. in today’s session, technology definitely leading the market today. also biotech leading the market. these are two areas of the market that have done so well since the low on march 11. when you see the market going up, it’s usually led by technology. today’s session was no different as i.b.m., one of the biggest gainers as sam pal sanoe says they see improvement in computer-related spending. computer sciences had second quarter orders and sales rising and lexmark got an upgrade. semiconductors performing quite well in addition. back to you, matt.
>> deborah kostroun, thanks very much. we’ll talk to you again in a little bit. the price of crude in new york rose to its highest level in more than three weeks today, and this before the release of the energy department weekly statistics, which come out tomorrow. gold futures also rose today, hitting a seven-year high, closing at $395 an ounce, the rally in gold as well as crops like wheat and corn, pushing the reuters c.r.b. index to its highest level in 6 1/2 years. deb did the micro picture. i’ll take care of the macro. the dow, s&p, and nasdaq all finishing at their best levels of the day. the dollar buys a little bit more yen right now, just a little bit. in new york, the euro rose to the highest level almost two weeks against the dollar and the gains for the euro accelerated after the french government said industrial production rose in september, making it the third monthly gain in four. the report followed data showing investor confidence in germany climbed to a six-month high. that was out yesterday. joining us to discuss the euro’s strength is currency strategist at credit suisse first boston. jason, thanks. the euro is up 11% against the dollar this year. what’s the likelihood in your opinion that the euro is going to continue to rise? >> i think it’s reasonably strong. for now, of course, the top has been capped by 118, 119 for a couple months, but given a couple of basic facts, the recovery seems to be taking place in europe now as well as in the united states, a little lag but seems to be arriving on the continent, that a positive for the currency. and here in the u.s., the federal reserve has maintained an easy stance of monetary policy, keeping interest rates very low and helping to encourage accumulation of other assets that are yielding slightly higher, the european assets falling into that basket as well. so, the euro rises against the dollar.
>> what does that say about the white house’s so-called strong-dollar policy?
>> the white house has a strong-dollar policy in name but in practice it seems to be anything but. you’ll notice every time they say the words strong dollar it’s quickly followed with an explanation they hope the dollar will come about as a result of a strong economy. so, given the fact we’re just now beginning to come out of the slump and starting to see a recovery, i think it might be a little premature for the white house if we had too rapid of a dollar rise.
>> we have just under a minute left, jason. the u.s. economy grew at 7.2% in the third quarter. the u.s. economy, the move of growth, where duste the dollar at the end of the year versus the yushe and yen?
>> i think the euro continues to move higher. dollar-yen, a lot of downward pressure against the asian currencies. that is where the white house would like to see most of the adjustments. 1.03 i think is an appropriate target there.
>> the witness may step down, jason bonanca from credit suisse first boston. appreciate your insight. stick with us. stocks posted their best gains in two days. full details on whether or not it will continue next with the chief equity strategist from wachovia securities, doug sandler.
