COMMENTARY -- Here's some good news for investors. Tech companies' profit and sales warnings are accelerating and Wall Street just isn't shocked anymore. Folks, those once lofty expectations are coming down so fast that merely meeting estimates may be viewed as great news.
Investors are clearly hoping for the market to hit bottom -- there's a lot of cash sitting on the sidelines. Conventional wisdom dictates that when negative preannouncements spark yawns you're somewhere close to the bottom.
Intel's (Nasdaq: INTC) revenue warning for the fourth quarter actually boosted shares Friday. Why? Wall Street had expected the warning and pummeled shares accordingly before the announcement. Simply put, we're used to the bad news. And Intel isn't alone. Evidence that we've hit a market bottom has been building for the last week.
Consider the following:
Xilinx's warning wasn't as bad as Altera's. If Xilinx would have warned first, its shares would have been whacked. Rick Billy of SG Cowen maintained a "buy" rating and called the lowered guidance "not good news, but not as bad as Altera." Simply put, investors are braced for the worst.
You'd think the LSI move would annoy investors, but Wall Street is realizing that the economy is slowing quickly. It's no surprise that LSI was caught off guard. Other chip makers had already noted the inventory worries in the industry.
The week ahead
There's one more burst of earnings set before the holiday stock market siesta sets in. Oracle and two CMGI companies -- NaviSite and Engage are set to report earnings.
Needless to say, most investors will be watching Oracle. Topics to look for will be applications sales growth and any signs that the company's brain drain is hurting the software giant.
Here's the breakdown:
Dec. 12: Engage (Nasdaq: ENGA) reports its first quarter earnings and we know the prognosis isn't good. The company already issued a profit warning. Meanwhile, online advertising growth is in a rut. First Call Corp. estimates: ($0.23)
Dec. 12: NaviSite (Nasdaq: NAVI) reports its first quarter earnings. These results may be a little tougher to call. First Call Corp. estimates: ($0.40)
Dec. 14: Oracle (Nasdaq: ORCL) could go a long way to cheering up tech investors. Aside from the items mentioned above, you should also tune into the company's conference call just to hear CEO Larry Ellison spew his usual venom. First Call Corp. estimates: $0.10.TDAIN