Wall St. Rebounds; but Will It Last?

Investors itching to get back into stocks on Monday found an excuse in some healthy first-quarter earnings news, at the start of a heavy week for profit reports.

Among the day’s big stock winners were Ford Motor, financial giant Citigroup and drug titan Eli Lilly, all of which reported results above expectations.

But the technology sector’s earnings may be most closely scrutinized this week, given the plunge in most tech stocks since mid-March.

Among the major tech companies reporting Monday was Texas Instruments, the world’s No. 1 maker of computer chips for mobile phones. After the market closed, the company said per-share operating income jumped 62% in the quarter on robust demand for chips for wireless communications.

TI said operating earnings were $470 million, or 55 cents a share, up from $278 million, or 34 cents, a year earlier.

Revenue climbed 27% to $2.65 billion.

Analysts’ average earnings estimate had been 53 cents, according to First Call/Thomson Financial. But TI failed to beat the “whisper” number of about 57 cents.

Some analysts, such as Cody Acree at Frost Securities in Dallas, were expecting higher sales.

TI shares surged as high as $159, up from $131.63 Friday, before earnings were announced. In after-hours trading the stock fell to $149.

TI said it expected its core semiconductor business to see robust growth in 2000, driven by communications end-equipment markets, including wireless and broadband.

TI also said it was raising capital expenditures this year to $2.5 billion from an earlier projection of $2 billion to answer growing demand for DSP and analog products, a move that will hold back profits but allow increased capacity and higher sales.

But Chief Financial Officer Bill Aylesworth said TI was not experiencing any problems supplying customers despite the continued demand for cell phones, high-speed modems and Internet music players.

TI reiterated its forecast that it will reach a pro forma operating profit margin of 25% by the end of 2000 and said that revenue in the second quarter would exceed the first quarter’s total.

At a Glance

Other technology earnings, excluding one-time gains or charges unless noted, include:

* Digital Island Inc. said its fiscal second-quarter loss widened to $92.7 million, or $1.49 a share, better than the $1.51-a-share loss forecast, from a loss of $8.9 million, or $3.77 a share. Revenue more than quadrupled to $11.3 million from $2.4 million but expenses soared ninefold.

* DoubleClick Inc. said its operating loss widened to $13.1 million, or 11 cents a share in the first quarter from $6.1 million, or 6 cents, matching analyst expectations. The company said revenue nearly tripled to $110.1 million from $39.4 million.

* FreeMarkets Inc. said its first-quarter loss widened less than forecast to $8.37 million, or 24 cents a share, from $492,000, or 4 cents, a year ago, as revenue climbed to $10.8 million from $3.5 million.

* Go2Net Inc. posted pro forma profit of $8.3 million, or 18 cents a share, in its fiscal second quarter, blowing away Wall Street estimates of 11 cents a share, as the Internet portal saw revenue quadruple and daily viewing of its Web sites nearly triple. The company said revenue climbed to $18.7 million from $4.3 million.

* Media Metrix Inc. said its loss narrowed more than expected in the first quarter to $2.3 million, or 11 cents a share, from a loss of $1.6 million, or 12 cents a year ago. The Web measurement firm’s revenue tripled to $10.2 million from $3.2 million.

* Novellus Systems Inc. said first-quarter profit climbed sixfold to $57.5 million, or 45 cents a share, from $9.43 million, or 8 cents, a year ago. The results soared beyond analyst estimates of 39 cents.

* Vitesse Semiconductor Corp. said first-quarter profit climbed 74% to $27 million, or 16 cents a share, from $15.5 million, or 9 cents, a year ago. Revenue jumped 50% to $100.2 million.

Bloomberg News contributed to this report.

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Earnings Preview

A sampling of companies expected to report today, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call/Thomson Financial.

Expected Today

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Ticker Analysts’ Year-ago Predicted Company symbol estimated EPS quarter pct. chg. Copper CMTN $0.12 $0.01 +1,100% Mountain Networks Teradyne TER 0.52 0.10 +420 Qualcomm QCOM 0.24 0.10 +140 Broadcom BRCM 0.16 0.07 +129 Sybase SYBS 0.13 0.07 +86 Weyerhaeuser WY 0.92 0.51 +80 America Online AOL 0.09 0.05 +80 EMC EMC 0.29 0.20 +45 Tyco TYC 0.50 0.35 +43 International Cheesecake Factory CAKE 0.25 0.18 +39 ICU Medical ICUI 0.32 0.25 +28 Molex MOLX 0.29 0.23 +26 Intel INTC 0.69 0.57 +21 Public PEG 1.02 0.85 +20 Serv. Enterprise Whirlpool WHR 1.36 1.15 +18 State Street STT 0.87 0.74 +18 Golden GSB 0.59 0.50 +18 State Bancorp Jefferies JEF 0.59 0.50 +18 McGraw-Hill MHP 0.14 0.12 +17 Federal FRE 0.80 0.69 +16 Home Loan AmSouth Bancorp ASO 0.40 0.35 +14 Automatic AUD 0.41 0.36 +14 Data Processing Johnson & Johnson JNJ 0.91 0.80 +14 Southern SO 0.36 0.32 +13 Wells Fargo WFC 0.60 0.53 +13 Mellon Bank MEL 0.49 0.44 +11 Philip Morris MO 0.89 0.80 +11 RemedyTemp REMX 0.40 0.36 +11 Pitney Bowes PBI 0.57 0.52 +10 Cendant CD 0.23 0.21 +10 PaineWebber PWJ 1.09 1.01 +8 Tellabs TLAB 0.26 0.25 +4 ALZA AZA 0.29 0.28 +4 FirstEnergy FE 0.62 0.60 +3 Washington Mutual WM 0.81 0.79 +3 Caterpillar CAT 0.58 0.57 +2 Dana DCN 1.01 1.00 +1 IBM IBM 0.78 0.78 0 Mallinckrodt MKG 0.75 0.75 0 Sprint FON 0.47 0.47 0 Milacron MZ 0.37 0.40 -8 Boston Scientific BSX 0.23 0.25 -8 Harrah’s HET 0.27 0.30 -10 Entertainment Maytag MYG 0.85 0.95 -11 Southwest Airlines LUV 0.16 0.18 -11 Delta Air Lines DAL 1.10 1.32 -17 Sprint PCS PCS -0.58 -0.71 -18 Banc One ONE 0.60 0.88 -32 Progressive PGR 0.15 1.39 -89 Parametric PMTC 0.00 0.16 -100 Technology US Airways U -1.48 0.49 NM Inco N 0.46 -0.13 NM Lam Research LRCX 0.36 -0.13 NM Covad COVD -0.79 -0.37 NM Communications Inktomi INKT -0.02 -0.07 NM

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Notes: NA = not available NM = not meaningful. A loss in any period makes percentage change not calculable.

Year-over-year growth and percentage changes are based on earnings-per-share figures and may differ from percentage changes based on total profit.

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For more information on First Call, check https://www.firstcall.com.

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