Schaeffer's Midday Options Update Features Cree, Delta Airlines, Fairchild Semiconductors, Juniper Networks, and KLA-Tencor

Business Wire, Oct 15, 2004

CINCINNATI -- Today's Schaeffer's Midday Options Update Features Cree (Nasdaq:CREE), Delta Airlines (NYSE:DAL), Fairchild Semiconductors (NYSE:FCS), Juniper Networks (Nasdaq:JNPR), and KLA-Tencor (Nasdaq:KLAC). The Midday Options Update contains a brief commentary on the day's most notable activity and a table listing the most active calls and puts for the day. The Midday Options Update is published every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1M&PAGE=1

Options Update:A Look at KLA-Tencor Ahead of Earnings

A flurry of news announcements set the tone for the market today. First, came the Labor Department's report concerning the producer price index (PPI), which showed a slight improvement. Second, came positive news concerning retail sales in September. Third, the University of Michigan reported a dip in its consumer sentiment index. Finally, we had the Federal Reserve's (Fed) report showing a slight decrease in September's industrial production numbers. Following is a brief summary of each of the announcements:

--The PPI rose a mere 0.1 percent, in line with the consensus estimate. The "core" index, eliminating food and energy prices, rose 0.3 percent versus the Street's estimate for a rise of 0.2 percent. This marks the biggest gain in four months after August's slim pullback.

--Retail sales for September were driven higher by a marked improvement in auto sales. The Commerce Department announced a 1.5-percent increase in September, topping analysts' expectation for an increase of 0.7 percent.

--The University of Michigan's consumer sentiment index showed a major slip, from 94.2 to 87.5 points. The Street was expecting a decline to 93.9. This had little effect on consumer spending, which increased 1.5 percent.

--Finally, the Fed announced September's industrial production numbers. An increase of 0.1 percent was seen, while an increase of 0.2 was expected.

Can You Take CREE Higher?

Late yesterday, semiconductor concern Cree (Nasdaq:CREE) announced first-quarter earnings of 32 cents per share on revenue of $24.4 million. This report handily topped expectations of a profit of 28 cents per share. CREE's sales soared to $95.9 million, a full 45 percent higher over the first quarter last year but, falling short of expectations of $97 million. This news prompted the company to forecast earnings of 30 cents per share to 32 cents per share for the second quarter. Analysts expect a profit of 28 cents per share for the company.

Flying Low

Delta Airlines (NYSE:DAL) reported today that it expects a larger loss in the third quarter ending September 30. In the third quarter, the airline sees a loss of $625 million to $675 million ($4.99 to $5.39 per share). Last year, DAL announced a loss of $1.36 per share ($164 million). Analysts expect a third-quarter loss of $3.79 cents per share. Contributing to this loss are one-time charges, higher oil prices (of course), and a decline in DAL's domestic passenger-mile yield. The first of the two charges is in the $40-million realm, stemming from an asset impairment charge concerning the sale of eight airplanes. The second charge is a non-cash settlement for pension distributions to retired pilots that totals $14 million.

Unfair?

Fairchild Semiconductors (NYSE:FCS) reported third-quarter earnings late yesterday, swinging to a profit of 11 cents per share versus a loss of five cents per share in the same quarter last year. The profit, excluding items, was 26 cents per share, topping the consensus estimate by one cent. All the news was not good for FCS, as the company announced that it sees fourth-quarter revenue falling in the five-to-10-percent range. This lowered outlook earned FCS an analyst downgrade from "buy" to "market perform."

Jumping Juniper!

Yesterday, Juniper Networks (Nasdaq:JNPR) saw a surge in sales thanks to a positive earnings report. The company announced that it made nine cents per share in the third quarter. Excluding one-items and reorganization costs, JNPR saw a profit of 13 cents per share, topping the Street's expectation of 11 cents per share. Today is a different story for the company. Investors were let down by the company's NetScreen division, which slipped 12 percent from second quarter numbers. This report prompted Deutsche Bank to send out a lowered price target of $28, down from $30.

Most-Active Options Update

At 1:56 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 9,968.6) is up 0.74 percent and the S&P 500 Index (SPX - 1,112.15) is higher by 0.80 percent. The Nasdaq Composite (COMP - 1,920.6) is up 0.92 percent. At 1:57 p.m. in the options pits, 2,483,355 calls and 1,819,631 puts traded for a composite put/call ratio across all five exchanges of 0.73. The CBOE put/call ratio for equity options weighed in at 0.77.