Analyst reports: Oracle, eBay, networking shares slide
Analysts wield their pens as swords as a series of downgrades and price cuts send shares of Oracle, eBay, Juniper Networks and Redback Networks into tailspins.
Oracle led the decline, falling as much as 18 percent after key executive Gary Bloom announced his exit plans Friday, becoming the second top-level manager to leave the database giant in recent months.
President Ray Lane resigned in June and later joined the venture capital firm Kleiner Perkins Caufield & Byers. Bloom, who was widely seen as being on a short list of Oracle executives who might succeed CEO Larry Ellison, is leaving the company to become CEO of business software company Veritas Software.
In their morning research notes Monday, analysts remained cautiously optimistic about Oracle, mostly reiterating existing ratings but reducing their price targets. Credit Suisse First Boston, Chase Hambrecht & Quist, Banc of America Securities and Frost Securities reiterated "buy" and "strong buy" ratings, while UBS Warburg cut its rating to "hold" from "buy."
Frost Securities cut its price target to $55 from $63, and UBS Warburg lowered its rating to $25 from $50. That may not be a tough target to reach: Oracle shares were trading at $24.88 Monday, down $3.94. On Sept. 1, the shares were trading around $46. (Click for current Oracle stock price.)
Banc of America Securities analyst Bob Austrian maintained his "buy" rating but explained that Bloom's departure is cause for concern.
"While his responsibilities will likely be adequately addressed by other senior staff, we believe his departure does present an added challenge for the company," Austrian wrote. "Bloom's marketing and deal-closing involvement will be missed, especially late in the November quarter."
Online auctioneer eBay also suffered Monday, after Lehman Brothers analyst Holly Becker downgraded the company to a "neutral" from "buy." Shares of eBay tumbled $8.69, or 20 percent, to $34.75. (Click for current eBay stock price.)
In her report, Becker wrote that eBay's core collectibles business appears to be slowing and that new initiatives will likely take more time and money to launch than originally estimated.
"We believe that the majority of antique and memorabilia collectors are already on eBay and that new users are not nearly as active as eBay's original fanatical users," Becker wrote. "We believe that newer initiatives will not gain traction as quickly and inexpensively as eBay's core business, which benefited from a tremendous amount of word-of-mouth marketing and free PR."
Becker further wrote that she had always seen America Online and Yahoo as potential acquirers of eBay if it began to struggle. "However, with both AOL and Yahoo trading well below their 52-week highs, the likelihood that either would pay a premium for eBay's valuable trading platform is far less," she wrote.
Meanwhile, networking companies Juniper and Redback also slid Monday following a critical report from Morgan Stanley Dean Witter analyst Christopher T. Stix.
Shares of Juniper tumbled $25.06, or 16.23 percent, to $129.31, while shares of Redback fell $8.13, or 10.06 percent, to $72.63. (Click for current Redback stock price or for Juniper stock price.)
Stix cut Juniper and Redback to "outperform" from "strong buy" ratings, reducing his 12-month price targets to $200 from $275, and to $115 from $150, respectively.
"Given the likelihood of a slowing economy, moderating demand from the service provider sector and an unexpected (first-quarter 2001) seasonality, we see an increasing likelihood of deceleration going forward," Stix wrote.
Also Monday, shares of Altera fell slightly after a jury ruled Friday that the maker of programmable computer chips infringed on two of rival Xilinx's patents. Altera said it will file a motion to reverse the finding.
Shares of Altera fell 75 cents, or 2.47 percent, to $29.63. Shares of Xilinx fell $1.88, or 2.96 percent, to $61.38.