By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) -- Shares of EMC Corp. and Western
Digital Corp. jumped Tuesday on the companies' strong results, as
chip stocks also lifted the tech sector after Texas Instruments
signaled a coming rebound.
TI (TXN) Chief Financial Officer Kevin March affirmed that view
Tuesday morning, saying in an interview, "We're seeing the classic
signs of a bottom. ... To the extent that history has been a good
predictor, we take those signs to point to the fact that we're
probably at the bottom now."
TI shares jumped late Monday after its earnings report, but the
stock slipped 1.8% Tuesday as analysts cited the company's weak
guidance and the lingering economic uncertainty.
The weak forecast was due mainly to TI's ongoing efforts to wind
down its baseband processor business.
"Texas Instruments echoed sentiments heard from a series of semi
manufacturers this quarter, signaling the bottom of inventory
reductions as orders ramped late in December and continued into the
first quarter of 2012," Charter Equity analyst Edward Snyder said
in a note.
But he added: "With limited visibility, a glut of capacity and
an economy staging a tepid recovery, we remain cautious without
evidence of sustainable demand."
Broader rally mode
Still, chip stocks were in rally mode, as the Philadelphia
Semiconductor Index (SOX) edged up 0.1%, boosting its year-to-date
gain to 13.5%.
Meanwhile, the Nasdaq Composite Index (RIXF) struggled to stay
positive. The benchmark was down a fraction at 2,781 at last check.
The group was weighed down by losses in shares of Hewlett-Packard
(HPQ) and Apple Inc.(AAPL)
Shares of InterDigital (IDCCD) were down 19% after the
wireless-patent technology said it had decided not to put itself up
for sale.
But the tech sector got a boost from surging shares of EMC (EMC)
which was up 6% after the data-storage-systems maker reported
financials that beat expectations and issued an upbeat outlook.
"Overall, EMC delivered strong performance during a difficult
quarter, given slowing IT spending trends, the hard-disk drive
situation in Thailand and the ongoing crisis in Europe,"
Ticonderoga analyst Brian White said in a note. "The company's
outlook for 2012 is above our estimates and speaks to the
resilience of the storage industry."
Also on the rise were shares of Western Digital (WDC) which
jumped 7% after the hard-disk-drive company, which took a heavy
blow in the Thailand disaster, reported being on a solid path to
recovery.
Needham analyst Richard Kugele upgraded the stock to buy from
hold, saying in a note that the company's "employees and management
have executed admirably through the tragic human and economic
disaster in Thailand."
"While all is not over, we are upgrading Western Digital to buy
from hold as a majority of the concerns leading to our November
downgrade have been alleviated," he added.
Shares of Polycom Inc. (PLCM) also traded up sharply by more
than 19% after the videoconferencing company reported a sharp gain
in profit, beating expectations.
Shares of VMware Inc (VMW) also advanced 8% after the maker of
virtualization software used by corporate clients reported a strong
surge in fourth-quarter earnings, beating Wall Street's
expectations. The company also posted a better-than-expected
revenue forecast.