BY Dennis Hobein:

Contributor, Stock Traders Daily

Real Time Trading Reports:  Included are detailed trading reports designed to help investors realize opportunities in these companies as earnings are released.  The reports are linked to the stock symbols in the article below. Performance - Click Here

(La Jolla, CA)  The quantity of third quarter earnings releases hits a high point this week, peaking on Thursday, October 29^th, with more than 250 companies set to report. Among the many on the calendar, some of the more relevant reports within the technology sector include handset manufacturer Motorola (NYSE: MOT), communication service provider Sprint (NYSE: S), semiconductor equipment maker KLA-Tencor (Nasdaq: KLAC), and security software developer McAfee (Nasdaq: MFE). Below, we have provided a preview for each company’s earnings release, and also highlight the areas of particular interest and importance that may provide a catalyst to move shares.

All Eyes On Motorola’s Fourth Quarter Guidance

It has been a long, difficult struggle for cell phone maker MOT, which has posted three consecutive quarterly losses coupled with steep, double-digit declines in revenue. The deep recession has undoubtedly harmed all handset makers, as recent weak earnings results from competitors such as Nokia (NYSE: NOK) and Research in Motion (Nasdaq: RIMM) indicate. However, MOT has been hurt more than most because of its thin product line, which has lacked a top selling device. With MOT now developing handsets operating on the new Android system – created by Google (Nasdaq: GOOG) – the company is looking to become a relevant player again in the industry, by grabbing some market share from phones such as the Palm (Nasdaq: PALM) Pre and Apple (Nasdaq: AAPL) iPhone. That time is still a quarter or two away though, as MOT’s first Android-based device, CLIQ, just hit the market this month. That makes the company’s fourth quarter guidance particularly important, which calls for earnings per share of $0.06 on revenue of $6.33 billion. For Q3, MOT is expected to report a breakeven quarter with revenue continuing to fall off a cliff, dropping 26% year-over-year to $5.54 billion. MOT shares had been on a tear from March to mid-September, more than tripling from $3 to over $9 during that time-span. The stock has cooled off as of late, shedding about a dollar to consolidate in the $8-$8.50 range over the past few weeks. If you are interested in trading this stock, you may find it helpful to review our free trading report on MOT first. 

Risk-Reward May Be Enticing For Sprint Shares

Sprint’s recent financial performance has been ugly. Last quarter, the company reported a loss per share of $0.13, which missed analysts’ expectations by $0.11, with revenue falling 10% year-over-year. The company also lost about 257,000 total wireless customers. That was a rough quarter, but was actually an improvement from the abysmal first quarter results, which included a wider net loss, a larger bottom line miss relative to consensus estimates, and a steeper decline in revenue. The poor financial performance has dragged the stock down by more than 50% since the beginning of May, now trading just north of $3. On the positive side, the company’s issues are well documented and virtually nobody is expecting a rapid turnaround for Sprint. In fact, Wall Street still projects losses of $0.65/share this year and $0.50 next year. Besides the rock-bottom expectations, there are a few other potential reasons to feel more bullish on Sprint. The company is expected to be a service provider for the upcoming launch of Android-based phones, and should be generating sales from these devices by year end. Sprint is already the exclusive service provider for Palm’s Pre and Pixi, so the company is well positioned with some market leading device makers. Additionally, Verizon’s (NYSE: VZ) earnings report on October 26^th suggested that the telecom service provider industry was strong, as that company beat its estimates with total wireless customers growing 26%. Sprint still has several imposing obstacles, however, such as elevated churn rates and pressured ARPU (average rate per user). Third quarter consensus estimates reflect these issues, currently forecasting a loss of $0.15 per share on revenue of $8.1 billion. It may be too early to predict a turnaround for Sprint, but the risk-reward level seems somewhat compelling here. For a more in-depth trading strategy, please check out our free trading report for Sprint.

KLA-Tencor A Clear Beneficiary From Semiconductor Turnaround

As a manufacturer of process control equipment for the semiconductor and memory industry, KLAC is a clear beneficiary in the turnaround occurring for companies such as Intel (Nasdaq: INTC), Samsung, and SanDisk (Nasdaq: SNDK). Companies such as these use KLAC’s equipment to detect defects in chips, and also to find ways to improve the yield of chips. With demand improving for semiconductors, based on a pick up in PC and notebook sales, KLAC’s customers have more room in capex budgets for KLAC’s products and services. Sell-side analysts are fairly bullish on the stock, with seven “Buys” or “Strong Buys”, ten “Holds”, and only one “Underperform”. Its’ fiscal first quarter estimates have been creeping higher as well, with the earnings estimate moving up to $0.02/share from a loss of $0.01 projected thirty days ago, and a current revenue estimate of $332.3 million versus the $325.9 million predicted last month. Since KLAC last reported earnings on July 23^rd, shares have moved higher by about 11%. Unlike the stock action leading up to its fiscal fourth quarter results, KLAC shares have been rather lackluster since the beginning of October. This may provide traders with an opportunity to enter at a favorable price point, but to develop a more specific trading plan for KLAC, we suggest reviewing our free trading report on that stock.

McAfee Has Strong History Of Beating Consensus Estimates

Security software provider McAfee is one of the rare companies that have kept its revenue and earnings growing throughout the economic downturn. Going back to the fourth quarter of 2007, MFE has only missed consensus estimates one time (1Q08) and has reported revenue in-line in each of the quarters during that time. There is reason to feel optimistic for this quarter, too. Deal flow for software vendors such as MFE and Symantec (Nasdaq: SYMC) is said to have picked up momentum recently. Close rates are also likely to show improvement, and large contracts from government agencies are becoming more frequent. Overall, EPS and sales are projected to grow 39% and 19% to $0.61 and $486.35 million, respectively.