Market briefing --- Matt (slow)
Intel --- Bob (fast)
NYSE --- Deb (fast)
welcome to “world financial report.” i’m matt nesto. it has just crossed the wires here seconds ago that the co-head of csfb, brian fin, has resigned. we’re citing people familiar with the circumstances. brian brian finn,, a member of the executive board, the second senior-level executive to leave in as many days from the investment banking arm of switzerland’s second largest lender. brian finn, the name in the news at this hour. the other name in the news, of course, intel coming out with long-awaited second-quarter earnings results. investors focused on the glass half empty as shares are trading lower in extended hours. bob bowden has been poring through the numbers and has a report.
>> i want to begin in an unconventional way by showing you the reaction after hours to intel’s earnings report. look at the reaction and i have an intraday chart, closing yesterday at $26.24. closing today at $26.14, then the news announced and shares initially went higher on the news, then investors looked at it more closely and have moved lower but even since that moving lower, they have periodically gone up higher only to fall lower again, trading now around the $25-a-share level. let’s get to the news that created a schizophrenic reaction. intel reporting operating earnings of 27 cents a share, almost doubling in the sprm interim, up 93% from the same quarter a year ago. moving on to sales, this is the first bit of bad news, sales at $8.05 billion, an 18% imprompt from last year but the sales missing the analysts’ estimates. gross margins only coming in at 59.4% compared to the company’s own forecast of 60% to 61% for last quarter. on the issue of the core microprocessor business, weakness expressed in this regard, fewer units sold for architecture microprocessors and lower selling prices, slightly lower than the first quarter but also more importantly, perhaps, fewer units. that data related to last quarter and as usual, investors concerned about the future, leading us to the third quarter forecast. the company projecting third-quarter sales in a range of $8.6 to $9.2 billion, a midpoint of $8.9 billion and that midpoint you see exceeds the analysts’ estimates for this quarter’s revenue, analysts guessing $8.76 billion. if you think the sales forecast means the company will be more profitable overall in 2004, not so fast? intel says gross margins overall in 2004 will be 60% plus or minus two points. previously, the company predicted 62% plus or minus a few points. so the midpoint of the full-year gross margin estimate is two% lower than they previously said. checking right now, intel shares in extended hours, intel closing the regular session today at $26.14, now trading at $25.03. when intel talks, investors in other stocks often react. checking reaction on the part of other large cap semiconductor stocks, texas instruments shares down 42 cents in the extended hours alone. national semi not reacting but look at the advanced micro devices, a leading competitor to the processor business for intel and those shares down 50 cents. checking semiconductor equipment stocks, amat down 24 cents, kla-tencor down 57 57 cents, now 63. novellus systems down 35 cents and checking p.c.-related stocks reaction to intel news, dell down 32 cents, just in the extended hours. dell now bounced back up to unchanged but microsoft down 22 cents. coming up, i’ll interview intel’s chief financial officer, andy bryant, live here on bloomberg bloomberg television at 6 5:00 p.m. -- 655 p.m., eastern time.
>> and nasdaq 100 futures down 18% right now so clearly, as of this minute, the nasdaq showering up for a tough day tomorrow. shares of juniper networks have done their part to soften that intel decline. they’re up 9% in the extended hours as you see here. the stock adding $2, close to $22 a share -- $24 a share. it closed the regular session at $22 a share ahead of the results. if you back out special items, juniper earned twice as much as expected. on a net basis, there was a loss of two cents a share and revenue coming in better than forecast. the company competes with cisco in selling routing equipment to telephone companies. the dow and s&p finishing up today, barely. and the nasdaq pretty much withering throughout the day. not big moves as you see down the line. choppy trading day with the major averages range-bound. deb kostroun was there at the big board to give us the dynamics within an otherwise lackluster day.
>> well, matt, we did see below average volume for a seventh day in a row. things slowing down, not many economic reports coming out. on thursday, we have the p.p.i., on friday, the c.p.i. so many traders i’ve been talking to like peter henderson of fleet specialists talking about why the c.p.i. will be so important for the stock market . he said you have to look at bonds, bonds doing quite well especially with the yield on the 10-year note at 4.47%. he says bonds are telling us that inflation is not out of control right now, and that’s why rates aren’t going to be rising quickly, as the fed has been saying and that’s why friday’s government report on c.p.i. will give us insight into whether or not inflation is a concern. also, the low volume we mentioned not just the market internals because it’s also relevant when we heard from broker/dealers like merrill lynch today. they reported lower-than-expected profits, partly due to lower commissions. raymond james said the same thing. merrill lynch, not closing on a 52-week low but hit it at $49.60. it closed at $49.80. jeffreys and company, their second-quarter earnings came in beating expectations. that stock higher and raymond james, echoing merrill lynch’s statement, that commission sales not performing well. retail sales, we’ll be looking at that closely. some of the retail stocks hit 52-week highs, including dillard’s and j.c. penney.
>> we talked about oil. new york crude oil futures fell for a third day, not a big drop today, but this is speculation that record production of diesel and heating oil in the u.s. could lead to lower demand later in the year. there’s a chart. not a big drop in the trade here today but yesterday it was a different story, of course, pulling back from the five-week high. the price was up but ended up finishing down on the day and all of this ahead of tomorrow’s d.o.e., department of energy, weekly petroleum supply report expected to show a slight decline of less than 1%. so we’re talking―let’s look at the oil supply data if we can. i put together a couple of charts for you, one of my favorites, the department of energy and american petroleum institute weekly supply data. what’s important here, this is a five years’ worth of these, is the fact of how much they’ve come back. up about, we’re at 305 million barrels in the stockpiles from a low of 270 million. that is hovering right around a two-year high in terms of oil supplies. merrill lynch shares fell after second-quarter performance disappointed analysts. we’ll look at the impact of sluggish trading volume in june for the world’s largest brokerage firm.
