NEC PROFIT ESTIMATE INCREASES
San Diego, CA — NEC said it expected an extra 100 billion yen ($936.2 million) in revenue for the April-September period to result in a 20 billion yen net profit. Although still a small amount for a company of its size, it is a substantial improvement on the 48.85 billion yen net loss for the same period a year ago and a May forecast of 10 billion. “I think we can set ourselves a strong target for the second half of the year as well,” company president Koji Nishigaki said at a news conference. He said healthy prices for DRAM chips had offset a drop off in demand for colour liquid crystal displays and a weak start to new system integration services.
Roaring demand for semiconductors on a worldwide info-tech boom has also provided extra earnings backbone for Toshiba. NEC and Toshiba are respectively the world’s second and third largest chipmakers, behind U.S. giant Intel Corp. NEC shares rose higher on the announcement to close up 100 yen or 3.33 percent at 3,100. Toshiba said it had boosted its group net profit outlook for the full business year ending March 31 to 135 billion yen, 35 percent higher than an earlier forecast and a strong turnaround from a 28 billion yen loss a year ago. That has resulted in nine percent climb in Toshiba’s shares this week to 1,124 yen. NEC did not say issue revision for full year estimates but said it may revise the numbers when interim results are announced in October.
EMULEX CALLS REPORT BOGUS
New York, N.Y. — In the latest hoax hatched on the Internet, Emulex Corp. on Friday refuted a report that said the maker of data storage equipment products would negatively restate its earnings to show a loss. Responding to an apparent press release, Emulex denied a series of damaging claims that sent the company’s stocks tumbling more than 40 percent. Company CEO Paul Folino is not resigning, the company said. And a profit of 25 cents per share in its latest quarter will not be revised to a loss of 15 cents per share. “Someone has put out a fictitious press release,” Kirk Roller, senior vice president at Emulex, told CNNfn. “None of those things are accurate.” But investors were at first confused. Emulex stock began a freefall early Friday after a report moved over Internet Wire that appeared to be a press release. A company contact name was included at the bottom of the page as well as a note to editors and the standard Securities and Exchange Commission disclaimer – all typical of a legitimate news release.
Internet message boards subsequently buzzed with rumors about SEC investigations and the resignation of its CEO. The company denied those claims. The release was picked up by news services and spread to trading floors. By mid-morning, more than 3 million Emulex shares changed hands, more than twice the average daily trading volume. Emulex is not the first company to be the victim of a bogus report. Last year, a former Pairgain Technologies Inc. employee pleaded guilty to two counts of securities fraud for posting a fake news report on the Internet that sent the value of his company’s shares soaring. Emulex went in the opposite direction. Costa Mesa, Calif.-based Emulex stock plunged 48-1/16 to 65 before trading was halted by Nasdaq. Officials, meanwhile, struggled to determine how the fake report became disseminated. Internet Wire, a self proclaimed press delivery mechanism, says it did not begin the false release. The company said it has called Emulex but can not get in touch with anyone to track the origin of the report. Internet Wire said it was preparing an official response. For its part, Emulex issued an authentic press release early Friday afternoon over Business Wire in response to the hoax. They company said its contacted the appropriate authorities – the Securities and Exchange Commission and the National Association of Securities Dealers – who are investigating this matter. Emulex intends to launch its† own investigation into this fraudulent release. The company sought to assure shareholders that its business fundamentals are sound.
COMPAQ STOCK HITS 52-WEEK HIGH
Austin, TEXAS — Compaq shares recently set a 52-week high of $34.19, the first time in seven months the shares cracked $33. The Houston-based computer maker has unveiled a slate of new products as it heads into the industry’s strongest season, and observers generally consider the company well managed. The situation is a reversal from a year ago, when Compaq was considered to be in poor shape after a string of earnings disappointments and a lengthy search for a new chief executive. Compaq shares bottomed out in October 1999, hitting a low of $18.25 shortly after chief executive Michael Capellas was hired that summer to replace Eckhard Pfeiffer, who’d been fired in April. “It was a big mess,” A.G. Edwards & Sons Inc. analyst James Johnson said. “And the stock has been pretty much dead money [since].” But that’s changing, and some observers expect the stock to reach the $50 heights it achieved in early 1999 before its crash.
The signs of life date roughly from the company’s second-quarter report in July. Compaq earned 21 cents a share, excluding investment gains, for the quarter on sales of $10.1 billion, about 8 percent higher than $9.4 billion in the dismal year-earlier period, when the firm lost 10 cents a share. The results matched Wall Street’s estimate and continued a trend of improvement. “The improvements have been consistent and significant since the new team has taken over,” Banc of America Securities LLC analyst Kurt King said. “Now, investors at large have decided to start giving the company credit.”