WEEK AHEAD: Brocade, Intuit earnings on deck
After enduring a stream of disappointing earnings from bellwethers, technology investors are looking forward to better news from a handful of smaller companies such as Brocade, Intuit and Autodesk next week.
For the week, the Dow Jones industrial average managed to gain 18 points to 10,799.01, while the Nasdaq composite shed 45 points to finish at 2,425.05.
Stocks gained ground initially following Federal Reserve Chairman Alan Greenspan's testimony before a Senate Banking Committee. While Greenspan reiterated his concerns about the slowing economy, he said the U.S. economy wasn't in a recession--at least not yet.
"Some people were disappointed that Greenspan did cite some signs of strength in the economy," said Ned Riley, chief investment strategist at State Street Global Advisors. "They saw it as an indication that maybe we aren't on a path to recession and that monetary policy might be applied more gradually than some had factored into the price of stocks."
Investors will also be paying close attention to the developments in Iraq over the three-day weekend after U.S. warplanes bombed five Iraqi military sites in what President Bush called a "routine mission" to protect American and British patrol aircraft enforcing the "no-fly zone" over Southern Iraq.
Back in March 1999 when the United States commenced bombing missions in Bosnia, the stock market had little reaction to the uncertainty overseas.
Plenty of investors had to run for cover this week after several blue-chip tech firms dropped some of their own bombs.
Following a disastrous profit warning from Nortel Networks (NYSE: NT) and disappointing earnings and guidance from Dell Computer (Nasdaq: DELL) and Hewlett-Packard (NYSE: HWP), tech investors can only hope next week's batch will turn the tide.
Analysts are expecting a profit of 12 cents a share in its fourth quarter on sales of $162.2 million.
Wit SoundView analyst Glen Ingalls named Brocade as his best short-term pick last week when the stock was trading at $74 a whack. Trading around $54 a share, the stock's been pounded in recent weeks, plunging from a high of $123 a share back in October.
Last quarter, Brocade raked in $27.2 million, or 22 cents a share, on sales of $132.1 million. It also set a 2-for-1 stock split.
Brocade is forecast to earn 62 cents a share in the fiscal year on sales of $829.8 million.
"The SAN market still has a long way to grow," Ingalls said last week. "Brocade's the best-positioned company in this group and is growing at an astronomical rate. It holds a dominant share position and is actually setting prices in this market."
It's that time of the year for taxpayers so it must be time for another good quarter from the financial software developer.
Intuit is expected to return a profit of 45 cents a share in its second quarter on sales of $462.6 million.
Intuit does the overwhelming majority of its business in the second and third quarters as customers flock to its TurboTax program to appease Uncle Sam.
Last quarter, Intuit beat the Street when it posted a loss of $21.4 million, or 10 cents a share, on sales of $187.5 million.
The stock is just as cyclical as its business. After surging to a 52-week high of $72.75 last February, the stock fell to a low of $25.75 in May.
Fourteen of the 16 analysts following the stock rate it either a "buy" or "strong buy."
Autodesk will report its fourth-quarter results next week with analysts predicting a profit of 52 cents a share on sales of $232 million.
Last quarter, it made $21.9 million, or 38 cents a share, on sales of $221.8 million.
Trading near $35 a share, the stock is well off its peak of $56.06 set in March.
The storage networking company has unraveled since its profit warning earlier this month, falling from around $30 a share to $13 a share after telling investors its sales and earnings will disappoint for the next several quarters.
Company executives guided analysts to expect earnings of 17 cents a share in its fourth quarter on sales of $47 million.
In its third quarter, Computer Network Technology pocketed $4.8 million, or 17 cents a share.