Investors Shed Risks (CIEN, KRO, JRCC, WDC, NPTN)

Stocks brushed off higher oil prices at the start of the day, but soon reversed course to trade decidedly lower. High-beta stocks continue to be some of the hardest hit whenever the market has sold off recently, as investors book profits and de-risk. High oil prices could certainly hinder the current economic recovery, but barring the tensions in the Middle East materially impacting Saudi Arabia, we think the price spike in oil is most likely temporary. We have been expecting a market pullback for awhile, and continue to remain cautious in the near term. Longer term, we remain upbeat.

The Data Storage Stocks Index was the top performing tickerspy Index on the day, led by Western Digital (WDC) with a 16% gain. The Optical Networking Stocks Index was the day’s worst performing tickerspy Index, with NeoPhotonics (NPTN) down -12%.

Stocks fell on the day, led lower by a -39 point, or -1.4%, decline in the Nasdaq. The Dow dropped -80 points to 12,090, while the S&P lost -11 points to close at 1,310. Oil rose $1.02 to $105.44 a barrel, while gold jumped $$5.90 to $1,434.50 an ounce.

In earnings news, shares of Ciena (CIEN) plunged -9.8% after the networking equipment maker forecast lower-than-expected Q2 revenue. For fiscal Q1, the company posted a loss of -$79.1 million, or -84 cents per share, compared with -$53.3 million, or -58 cents per share, a year earlier. Excluding one-time items, Ciena lost -14 cents a share compared with -12 cents a year earlier. Revenue more than doubled to $433.3 million. Analysts were expecting a loss of -16 cents on revenue of $422.5 million. Ciena forecast fiscal second-quarter revenue of $415-$435 million, below the consensus estimate of $439 million. Eight pros held Ciena in their portfolios at the end of 2010, and almost 320 tickerspy members own the stock in their portfolios.

Kronos Worldwide (KRO), the maker of titanium dioxide pigments, reported a fourth-quarter profit of $36.4 million, or 66 cents per share, compared with $5.1 million, or 11 cents share, a year earlier as sales surged 24% to $373 million. Analysts were expecting a profit of 61 cents on revenue of $367 million. Shares of Kronos rose 2.1%.

Coal miner James River Coal (JRCC) posted a fourth-quarter profit of $25.9 million, or 93 cents per share, compared with a net loss of -$3.2 million, or -12 cents per share, in the year earlier period. Excluding one-time items, James River earned 14 cents a share. Revenue jumped 8% to $162.1 million. Analysts were expecting a profit of 30 cents on revenue of $169.4 million. The stock got a lift on news that James River will acquire International Resource Partners for $475 million in cash, a deal that will help James River boost its shipments of metallurgical coal. The stock surged 14.6%.

Shares of Western Digital, the world’s largest hard-drive maker, soared 15.6% after the California-based company said it is acquiring Hitachi Global Storage Technologies, the third-largest hard driver manufacturer, for $4.3 billion in cash and stock. The acquisition, which is slated to close in the third quarter, will immediately add to Western Digital’s earnings per share and give the company an approximately 50% market share. Seventeen pros held Western Digital in their portfolios at the end of 2010, and almost 400 tickerspy members own the stock in their portfolios.

Tags: CIEN, JRCC, KRO, NPTN, WDC