80 Companies in the Region Rose 5.1 Percent in the Three Months

The strongest first-quarter rally for U.S. stocks in 13 years boosted most of the Bay Area's biggest companies, with sunnier forecasts for the rest of the year encouraging investors.

The Bloomberg San Francisco index, which includes 80 companies in the region, rose 5.1 percent in the three months ended March 31, with gainers outnumbering losers by more than 3 to 1. 

 

JDS Uniphase Corp. led the pack with a 44 percent jump, followed by VeriFone Systems Inc.'s 43 percent surge and Super Micro Computer Inc.'s 39 percent rise.

"We've actually had a couple of pretty good months now, which is something kind of refreshing," said Dan Cook, chief executive officer of brokerage IG Markets Inc. "Looking across the sectors, everything saw pretty solid gains. It was all pretty positive."

The benchmark S&P 500 index advanced 5.4 percent, the biggest first-quarter gain since 1998, as investors speculated that the global economy can withstand the Japanese earthquake and nuclear crisis, as well as revolts in the Middle East and North Africa. Locally, the biggest gainers reported earnings that topped analyst estimates and raised their forecasts for the year.

When JDS Uniphase announced results in February, it beat analysts' estimates by 49 percent and predicted revenue for the quarter ended last week would rise to at least $440 million. Analysts, on average, were projecting $420.9 million at the time. JDS, which makes equipment used to test fiber-optic and mobile communications networks, is benefiting from a surge in Internet and cell-phone traffic, said Jim Monroe, a spokesman for the Milpitas company.

'Explosive demand'

"Close to 80 percent of our revenue directly supports what is explosive demand for bandwidth worldwide," Monroe said. "That demand is being driven by the proliferation of tablets, smart phones, people wanting video to any device."

VeriFone, based in San Jose, also beat analysts' estimates when it reported results in March. The company, which makes equipment for electronic payments, forecast first-quarter sales of at least $280 million. Analysts had estimated $276 million.

VeriFone is working with Google Inc. to test a mobile-payment service at stores in San Francisco and other cities, three people familiar with the project said last month.

Google will pay VeriFone to install thousands of special cash-register systems at retailers, said one of the people, who requested anonymity because Google's plans haven't been made public.

Paying with phones

The market for what is called near field communication technology is gaining interest from numerous companies, CEO Douglas Bergeron said. The technology lets consumers pay for products and services by tapping a smart phone against a register at checkout, rather than using cash or a physical credit card.

"It's not just the Googles of the world, it's the existing participants in the credit card ecosystems - Visa, MasterCard, American Express," he said. "All of the new entrants are seeing that there's a very interesting business to be built once smart phones can replace cards."

Super Micro Computer Inc., a San Jose maker of computer servers and accessories, rose 39 percent in the quarter after it posted record revenue and profit in January. Earnings per share, excluding some items, were 21 percent higher than analysts expected.

Dolby disappointment

Dolby Laboratories Inc. led the decliners in the first quarter with a 26 percent decline, followed by Intersil Corp., which slid 18 percent.

Dolby, the inventor of surround sound and other audio technologies, lowered its forecast in February for the fiscal year ending Sept. 30. It said on an earnings conference call that shipments of computers, from which Dolby receives licensing fees, would be lower than previously expected. The shares declined 8.1 percent the next day.

The San Francisco company now estimates that sales for the year will be $930 million to $970 million, down from previous guidance of $950 million to $990 million. Analysts on average had expected the company to report sales of $993 million.

"We have a policy of not commenting on our stock price," said Joshua Gershman, a Dolby spokesman.

Intersil, a Milpitas semiconductor maker, also forecast profit for the March quarter that missed analyst estimates. Excluding some items, Intersil expects to earn 16 cents a share at most. That trailed the 23-cent average analyst estimate at the time. Carolyn Robinson, a spokeswoman for the company, said Intersil is in a "quiet period" and declined to comment.