Software stocks issued a slew of warnings last week, casting a shadow over
investor enthusiasm for what they hope to be an upbeat earnings season. "We're
in the midst of earnings pre-announcements and they're spooking people," said
Peter Boockvar, equity strategist at Miller Tabak, to CBS MarketWatch.
Software firms led the pack with warnings, mostly due to delays in customer
purchases. JDA Software, Veritas Software and Secure Computing reduced their
quarterly forecasts. Siebel Systems lowered its second-quarter revenue
outlook, and BMC Software cut its quarterly profit view. PeopleSoft said the
hostile takeover bid from Oracle negatively impacted its business and is
partly to blame for the firm's reduced second-quarter guidance. Meanwhile,
Computer Associates cut its quarterly revenue forecast, but stood by its
earnings outlook. Elsewhere, Yahoo! more than doubled its quarterly profit
from last year; however, investors honed in on its weaker sales outlook.
"(Tech stocks) have gotten hit so hard . . . It seems like earnings are
slowing, and I think investors are very concerned, as they always are with
that sector, given how volatile it can be," said Owen Fitzpatrick, head of the
U.S. equity group at Deutsche Bank Private Banking, to Reuters News. Some
negative tech research also conspired to keep the sector down last week.
Communications chip firms suffered, after Lehman Brothers said demand in the
industry is lackluster, causing the brokerage to downgrade some of those
firms. Lehman Brothers also cut Intel's third-quarter earnings estimate by a
penny due to subdued early demand for personal computers nearing the back-to-
school season. This week, earnings season kicks off in earnest, with results
from Intel, AMD and Apple Computer due. A heavy dose of economic reports,
including June's PPI and CPI results are also on the docket.
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
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