Markets & Finance

Synopsys Posts a Loss after Charges


Synopsys (SNPS) posted a fourth quarter pro forma loss of $1.31 vs. 33 cents earnings per share. Revenues rose to $309 million vs. $184 million. Earnings per share excluding charges were 96 cents vs. 39 cents. The company sees first quarter revenues between $262 million and $273 million, and $3.25 earnings per share before goodwill for fiscal 2003.

IBM Corp. (IBM) says its pension should be fully funded at year end, which is currently $3 billion below being fully funded, citing improving stock markets and the status of the pension fund. The company does not expect the plan to change its earnings per share expectations for 2003.

Tenet HealthCare (THC) cut its fiscal 2003 earnings per share estimate to $2.38-$2.78. S&P reiterates hold. The hospital operator says the low end of the range assumes elimination of all Medicare outlier payments effective Jan. 1, 2003, while the upper end of the range assumes no change. Morgan Stanley says the guidance cut was expected, and the stock is trading up on improved visibility and sector rotation.

DuPont Photomask (DPMI) will consolidate its European operations and cut its global workforce by 8%. As result, the maker of photomasks for chip wafers will take a $12 million to $14 million second quarter after-tax charge. The company sees a 45 cent to 55 cent second quarter loss, and assumes a 10% tax rate.

Thomas Weisel transitioned its coverage on QLogic (QLGC) and now rates the stock as market perform, citing decelerating growth.

Morgan Stanley downgraded the electronic manufacturing service view to cautious from in-line. Morgan Stanley says Flextronics' (FLEX) favorable long-term growth trends are more than offset by valuation, margin pressure and earnings per share risks.

Lehman cut the oil service sector to neutral from positive, and downgraded Halliburton (HAL), BJ Services (BJS) and Smith International (SII).

Baird downgraded Agilent Technology (A) underperform from neutral.

Triangle Pharmaceutical (VIRS) agreed to be acquired by Gilead Sciences in a $464 million deal. Terms: $6.00 cash per Triangle share.

CS First Boston upgraded Ashland (ASH) to outperform from neutral.

Expedia (EXPE) initiated a $5 booking fee for most airline tickets bought on its U.S. web sites, but the company can not yet estimate how much impact the fee will have on fourth quarter earnings. Salomon cut to in-line from outperform on valuation.

Salomon downgraded Hotels.com (ROOM) to in-line from outperform on valuation.

Salomon downgraded Kinder Morgan (KMP) to in-line from outperform on valuation.

Korn/Ferry International (KFY) posted a five cent second quarter loss (excluding a 43 cent restructuring charge) vs. a four cent loss on a 20% fee revenue decline, citing a weak global economy. Korn/Ferry sees $71 million to $77 million in third quarter fee revenue, and a four cent to 10 cent loss per share.

Office Depot (ODP) says it remains comfortable with the current consensus earnings per share estimate of 22 cents for the fourth quarter, a 69% rise vs. a year ago. The company says it had a strong Thanksgiving weekend, but is cautious regarding the outlook for December.

United National Foods (UNFI) posted 28 cents vs. 26 cents first quarter earnings per share (excluding items) on an 11% revenue rise, and sees 26 cents to 28 cents second quarter earnings per share, and $1.18-$1.20 for fiscal 2003.

Bob Evans Farms (BOBE) posted a 2.8% decline in same-store sales at 431 core stores for four weeks to Nov. 22. Accounting for a later Thanksgiving holiday period in 2003, the decline comes to 1.3%.

Papa John's Pizza (PZZA) posted a 1.5% rise in domestic same store sales for four weeks to Nov. 24. Total sales, including international stores, rose 5.7% on a constant U.S. dollar basis.

Syncor (SCOR) amended a merger deal under which Cardinal Health will acquire Syncor. Syncor holders will receive a 0.47 share Cardinal Health for each Syncor share; the original deal provided for a 0.52 share of Cardinal Health.

Hewlett-Packard (HPQ) trimmed the fiscal 2003 revenue target to 2%-4% growth, below the 4%-6% forecast, and says it expects to achieve $3 billion of annualized cost savings by the end of fiscal 2003, one year ahead of schedule. S&P keeps hold.

Walt Disney (DIS) says, to reflect a lower book value for its film "Treasure Planet", it is obliged to take a $74 million pre-tax writedown for the fourth quarter; Disney now sees nine cents earnings per share. Additionally, Disney says the film will likely lower first quarter earnings per share expectations by a penny, according to The Wall Street Journal. S&P keeps hold.

Morgan Stanley lowered the semiconductor equipment industry view to in-line from attractive, citing a muted cyclical recovery in 2003 and a huge run in the group sending valuations to uncomfortable levels. A key company in this group is Applied Material (AMAT).

CS First Boston reportedly upgraded Ashland (ASH) to outperform from neutral.

Mentor Graphics (MENT) expects bookings to grow almost 20% in 2003, and notes half of the growth will come from its IKOS acquisition, while the other half is expected to be organic growth. The company sees about $660 million in 2003 revenue. Needham downgraded to hold from buy.

JD Edwards (JDEC) posted 13 cents vs. 18 cents fourth quarter earnings per share (pro forma) despite a 5% revenue decline. S&P reiterates hold.

Integrated Devices (IDTI) cut its third quarter revenue forecast to down 12%-14% sequentially, and lowered its pro forma loss estimate to $0.17-$0.21. The company notes it cut its workforce by 5% in October. S&P downgraded to avoid. Morgan Stanley cut estimates.

Morgan Stanley downgraded AOL Time Warner (AOL) to equal-weight from overweight. Goldman keeps underperform. On Tuesday the company forecast 2002 EBITDA growth at the low end of a 5%-9% range.


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