DJ MARKET TALK: Street Says 'Big Deal' To Lucent's Big Deal
22 May 15:41
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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3:41 (Dow Jones) Pity Lucent Technologies (LU). On Tuesday, the company
announced a contract with Qwest Communications International (Q) that will make
Lucent Qwest's key supplier of digital subscriber line systems in a major
service expansion effort over the next two years. Lucent officials describe it
as the largest such contract the company has ever signed, though they declined
to name a price. So how did Lucent's stock do? Most recently, down a dime, or
1%, to $9.80. The reason? More overhang from talks of a possible acquisition of
Lucent by France's Alcatel SA, with little supposed premium to Lucent's
existing stock price, according to a story in Tuesday's The Wall Street
Journal. Lucent officials would not comment on the rumors of merger talks.
(JDB)
3:31 (Dow Jones) Salomon Smith Barney analyst Thomas O'Donnel says of
long-awaited and ultimately leaked CBO study on Fannie (FNM) and Freddie (FRE)
subsidy: "We believe the study is flawed and should not bolster Rep. Baker's
(R-La.) case against the GSEs. However, traders jumped at the news as a reason
to sell as FNM and FRE shares were down on both Thursday and Friday." Shares of
both up about 1% Tuesday. (JC)
3:21 (Dow Jones) An overwhelming number of respondents to a Ried Thunberg
poll found that most money managers do not expect Greenspan to signal that the
worst is over in the economy when he speaks Thursday night. (MSD)
3:16 (Dow Jones) S&P has updated its rating guideline for subprime mortgage
products after discovering that defaults on these loans occur sooner than prior
assumption. (JSX)
3:05 (Dow Jones) Some notable profit reports tonight. Kohl's (KSS) and Saks
(SKS) continue the steady flow from the retail group, with Intuit (INTU) and
Medtronic (MDT) among other big names on tap. And, don't forget Computer
Associates (CA), which last month overstated its EPS prediction for the year
due to a typo. First Call view is 46c. (TG)
2:55 (Dow Jones) Merrill Lynch says recent data support a key part of its
investment thesis for Brocade (BRCD) and McData (MCDT), and the storage space
in general. Its thesis has three main parts: Storage Area Networks (SAN) market
is bigger than estimates reflect, software will be key differentiator, and it
likes Brocade's positioning, and thinks near-term demand will help McData. (TG)
2:43 (Dow Jones) All those workers laid off recently during the economic
slowdown, take heart! CEOs are dropping like flies, too. Over the past few
days, PurchasePro's (PPRO) Junior Johnson, Redback's (RBAK) Vivek Ragavan and
Iomega's (IOM) Bruce Albertson have all stepped down. (RJH)
2:32 (Dow Jones) Investors in a secondary offering of 2.5 million shares of
drilling-equipment company Hydril (HYDL) are doing well. The shares were sold
at $26.50 each through Credit Suisse First Boston and Salomon Smith Barney.
Shares recently traded at $29.09. (RJH)
2:21 (Dow Jones) One of the biggest winners from the strong debut of coal
company Peabody Energy (BTU) is Lehman Brothers (LEH). Not only did the firm
underwrite the deal, but it also owns the company, or at least 59% of the
common stock. Peabody shares are up 34%. (RJH)
2:12 (Dow Jones) In afternoon trading in stock futures, traders say
institutional interest has dried up. The somewhat positive feel to the market
is based on technicals. Stock futures seen ending around unchanged. (ZHS)
2:06 (Dow Jones) Retailers like Target (TGT) have seen their stocks jump over
the past two weeks with news of the Fed's latest rate cut, and relief that
their 1Q results met analysts' expectations. But investors shouldn't forget
that those expectations had been mostly reduced ahead of time, says Eric Beder,
an analyst at Ladenburg Thalmann. Target's 6.3% 1Q net growthwould have been
"a real disappointment" this time last year, and yet its stock is climbing
toward the year-ago P/E ratio, he says. And whether rate cuts come to the
economy's rescue by the fourth quarter or not, the second and third quarters
are going to be difficult by any account, Beder says. "There's a lot of
downside risk to these stocks," he says. (JMC)
1:54 (Dow Jones) One conspiracy theory buzzing around dealing rooms is that
the bringing forward of 1Q German GDP data to Wednesday, from May 29, could
indicate data is very weak, giving ECB justification to cut rates at
Wednesday's council meeting. However, normal sensibilities suggest that recent
EU inflation data would preclude such a move, but who can read the ECB these
days? (AES)
1:49 (Dow Jones) Flush with new capital, which started streaming in on
Monday, floor traders say stock futures will end on an upbeat note Tuesday.
"I'm not too worried about S&Ps unless they start going below 1307," says one
trader. (ZHS)
1:41 (Dow Jones) Where has euro/dollar support gone? $0.8650 was supposed to
be an important threshold, and EUR/USD easily plunged through it to new low at
$0.8627, now at $0.8635. Next up: 86 cents, an analyst says. USD/JPY at
Y122.82. (JEN)
1:31 (Dow Jones) Bush chief economic adviser Laurence Lindsey told a group of
bankers Tuesday the president is considering one of their own to sit on the
Federal Reserve Board. "I think it's very important that the president
considers bankers and has bankers on the board." (DMK)
1:17 (Dow Jones) CBOT full seat sold for $328,001 on Monday, down from last
sale of $350,000 on May 11, according to exchange records. (SPC)
1:07 (Dow Jones) UBS Warburg's Gary Gordon upgraded Doral Financial (DORL) to
strong buy from buy based on price. The entire mortgage banking sector has
taken a hit in recent weeks over fears the refinancing boom is nearing an end
and that mortgage bankers' volumes and earnings will trend down, said Gordon.
The fears eruptedas long-term interest rates have remained stubbornly stable
despite the continued Fed funds cuts. Still, Gordon remains confident in Doral
Financial's earnings outlook and believes the company's stock price decline
offers a buying opportunity. Doral's shares recently traded at $26.40, well off
Gordon's $38 price target. (JKM)
12:55 (Dow Jones) Shares of Bottomline Technologies (EPAY) shot up Tuesday,
bolstered by coverage started by CIBC World Markets Monday and overall strength
in the sector. Although analyst Jennifer Scutti warned of near-term weakness,
her note helped sned shares of the electronic payment company up by nearly 40%
Monday and another 20% Tuesday. "Long-term growth prospects appear bright for
Bottomline Technologies," she said in her note, while also warning that
"near-term visibility is limited by the general slowdown in corporate IT
spending." (EGS)
(END) DOW JONES NEWS 05-22-01
03:41 PM |
