Zacks Sell List Highlights: Microchip Technology, OfficeMax, Honeywell, and Novell

Business Wire, Jan 12, 2005

CHICAGO -- Zacks.com releases details on a group of stocks that are part of their exclusive list of Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell): Microchip Technology, Inc. (NASDAQ:MCHP) and OfficeMax (NYSE:OMX). Further they announced #4 Rankings (Sell) on two other widely held stocks: Honeywell (NYSE:HON) and Novell, Inc. (NASDAQ:NOVL). To see the full Zacks #5 Ranked list of Stocks to Sell Now then visit: http://at.zacks.com/?id=92

Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Ranked Strong Sells by 168.2% annually (11.8% vs. 4.4% respectively). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, Zacks told investors which stocks to sell or avoid.

Here is a synopsis of why these stocks have a Zacks Rank of 5 (Strong Sell) and should most likely be sold or avoided for the next 1 to 3 months. Note that a #5/Strong Sell rating is applied to 5% of all the Zacks ranked stocks:

Microchip Technology, Inc. (NASDAQ:MCHP) said in early December that ongoing inventory correction in the semiconductor industry, along with weak end demand, resulted in lower bookings and turns than the levels required to meet its original guidance for its fiscal third quarter. As a result, Microchip lowered its revenue guidance for the quarter, and now expects a sequential decline of -7%. Earnings estimates for the year ending March 2005 decreased by 5 cents, or about -4%, from two months ago. The company will report the quarter's results on January 25.

OfficeMax (NYSE:OMX) earnings estimates for the year ended December 2004 and the year ending December 2005 have declined by approximately -8% and -28% respectively from one month ago. In mid December, the company stated that its retail sales and gross margins during the 2004 Thanksgiving-to-Christmas holiday season have been weaker than expected. Comparable retail sales are now expected to be nearly flat from the prior year. As a result, the company's 2004 operating income is expected to be less than previously forecasted.

Below is a synopsis of why these two stocks have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next 1 to 3 months. Note that a #4/Sell rating is applied to 15% of all the stocks ranked by Zacks:

Honeywell (NYSE:HON): In December, Honeywell forecasted 2005 earnings per share between $1.90 and $2 (not including the planned Novar acquisition.), whereas analysts were expecting approximately $2.02 for the year. Honeywell also forecasted 2004 earnings per share of $1.68, which was in-line with Wall Street expectations. Earnings estimates for 2004 have remained steady, while analyst expectations for 2005 are slightly below levels from one month ago. The company is scheduled to report its 2004 numbers on January 28th.

Novell, Inc. (NASDAQ:NOVL) earnings estimates for the year ending October 2005 are down 9 cents, or approximately -39%, from two months ago. In November, the company reported fiscal fourth quarter revenues of $301 million, which improved from the year-ago quarter but fell short of Wall Street expectations. In addition, the company recognized revenue of $12 million associated with its SUSE(R) LINUX business, which was also below what some analysts were expecting.

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About the Zacks Rank

For over 15 years, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988 the #1 Ranked stocks have generated an average annual return of 32.9% compared to the (a)S&P 500 return of only 11.8%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). And since 1988 the S&P 500 has outperformed the Zacks #5 Ranked Strong Sells by 168.2% annually (11.8% vs. 4.4% respectively). Thus, the Zacks Rank system can truly be used to effectively manage portfolio trading.

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