Tech's Quadruple Giant Earnings on Deck (AMZN, JNPR, MSFT, SNDK)

Today is effectively what we are penning as the crest of earnings season.  Things have changed because of the sell-off seen this morning on options trader valuation and implied percentages.  We tallied over 60 companies with earnings just of active or large companies, but there are well over 200 reports today alone.   After the close of trading today we have earnings reports from Amazon.com Inc. (NASDAQ: AMZN), Juniper Networks, Inc. (NASDAQ: JNPR), Microsoft Corporation (MSFT), and SanDisk Corp. (NASDAQ: SNDK).  We have given estimates here from Thomson Reuters for consensus data and provided additional color and data that traders will be using to determine how to play each report.

Jeff Bezos and friends at Amazon.com Inc. (NASDAQ: AMZN) might have new competition from the new iPad and maybe from the Nook versus Amazon’s Kindle.  The focus is still going to be on its strong Christmas sales, and you know the expectations are solid when Amazon is up on a day that the market is down so much.  The stock was just upgraded to Buy with a $155 target yesterday in an analyst call, and that old $200+ target from Jim Cramer is hard to forget about. Thomson Reuters has estimates of $0.72 EPS and $9.04 billion.  This will not be a question of meeting estimates, but the belief is that Amazon will blow away estimates.  It is hard to know if Bezos will give longer guidance, but the fiscal-2010 estimates are $2.60 EPS and $30.27 billion in revenues.  At $123.50, its 52-week trading range is $47.72 to $145.91.  Based on today’s prices, it seems that options traders are braced for a move of up to about $8.00 in either direction.  Based upon the moves we have seen in the recent quarters, that $8.00 move is not hard to think of as being low.

Juniper Networks, Inc. (NASDAQ: JNPR) will be one that the investment community tries to use as a proxy for Cisco Systems Inc. (NASDAQ: CSCO) for that enterprise spending but it is only one-tenth the size.  Estimates are $0.26 EPS and $884.8 million in revenues.  For next quarter, those estimates are $0.24 EPS and $873.2 million in revenues.  At $24.10, Juniper’s 52-week trading range is $12.43 to $28.74.  The average price target from analysts is close to $28.50 and that is just above what has been a long-term resistance level for the stock.  It will be interesting to see if the company thinks its recent Polycom venture will add incrementally to revenues ahead.  Juniper can be volatile around its earnings reports, and it appears that options traders appear braced for a move of up to $1.20 or $1.25 either way.

Microsoft Corporation (NASDAQ: MSFT) is of course the Big Kahuna today.  This is probably unfair to all of Microsoft’s other operations, but today’s reaction may key solely on how many units of Windows 7 were sold and how many are projected to sell.  Estimates are $0.59 EPS and $17.84 billion in revenues for this last quarter, and estimates for the current quarter are $0.44 EPS and $14.56 billion in revenues.  For fiscal June-2010, those estimates are $1.85 EPS and $60.21 billion in revenues.  At $29.05 this morning, the 52-week trading range is $14.87 to $31.50.  After a quick review, options traders appear to be braced for a move of up to $1.20 or so in either direction.

SanDisk Corp. (NASDAQ: SNDK) is on deck and we’d say that this could be perhaps the most volatile of all the big tech earnings reports based upon recent announcements.  The independent leader of flash memory has estimates of $0.69 EPS and $1.16 billion in revenues. This may boil down to only how much its beats estimates because it posted prior blow-out quarters in the last two reports.  Estimates for the quarter we are already in now for guidance are $0.27 EPS and $916.3 million in revenues.  At just under $29, the 52-week trading range is $7.53 to $32.08.  After a 300% pop from lows for the industry’s independent leader and after two blow-out quarters in a row, the bar has to be extremely high here.  Options traders are braced for a move of close to $2.00 in either direction, although this seems tiny based on the most recent data.  Interestingly enough, the most recent short interest in the stock fell by almost 24% to 13,135,260 shares as of a January 15 settlement date.

All estimates for earnings and revenues are from Thomson Reuters.  We also want to caution that using options still has a large amount of time value and today’s increase in the VIX may be throwing some of these expectations out of kilter from where they were even yesterday.

JON C. OGG