DJ MARKET TALK: Ciena Seeing 'Desperate' Price Concessions
17 May 10:21
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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10:21 (Dow Jones) Ciena (CIEN) executives may have given investors a little
indigestion Thursday after releasing 2Q numbers that soundly beat analysts'
estimates. In an earnings conference call that stretched to midmorning, Ciena's
new Chief Executive Gary Smith said some of its competitors are making
"desperate" price concessions on equipment to gain business. The effect on
Ciena might be a 1% decrease in gross margins during the 3Q versus the 2Q.
Smith said the company was only being "prudent" in discussing the possibility.
(JDB)
10:16 (Dow Jones) Though current Philly Fed manufacturing measures still
weak, the outlook is improving. 6-month business index up almost 8 points to
33.1 in May. So despite "current lull," responses suggest activity should pick
up over next six months, according to Philly Fed. (BB)
10:09 (Dow Jones) Tellium (TELM) has gone from being a lost cause to a new
issue that could have a big impact on the outlook for the IPO market. Through
its registration process, the optical-switch maker cut its valuation by half.
But, today it tacked on extra shares to its IPO and priced the deal at the high
end of the range. If the company can hold this aggressive price for a few
weeks, it will bode well for other money-bleeding new tech issues and IPOs in
general, says David Menlow of IPOfinancial.com. "You cannot have a sustainable
market rebound without the tech sector," he says. (RJH)
10:03 (Dow Jones) Philadelphia Fed generally as expected at -8.8 in May, down
1.6 points from April. Prices paid down 5.5 points to 1.5 and some firming in
prices received, though still in negative territory. Bottom line: manufacturing
still weak and still acting as disinflationary force. (BB)
9:57 (Dow Jones) Merrill moves to"no opinion" rating on Mexico's Banacci,
saying it won't trade on fundamentals following news Citigroup (C) will buy the
Mexican bank in a deal valued at $12.5 billion. Banacci shares up nearly 30% in
Mexico City. Merrill says Citigroup paying just 10 times consensus 2002
earnings, calling the move excellent both strategically and financially. (SW)
9:55 (Dow Jones) Sure Krispy Kreme Doughnuts (KKD) is getting a nice bit of
publicity from its move to the NYSE (like this darling of the market needed
more). But, in the move, it's giving up something: a good stock symbol. It used
to be "KREM," very kremy indeed. Now its "KKD," which has the ring of a Soviet
agency. Our suggestion would have been something more clever, like "FAT."
(RJH/GC)
9:46 (Dow Jones) Federated Department Store's (FD) mixed bag of earnings and
its outlook Wednesday led UBS's Linda Kristiansen to cut her 2Q EPS estimate to
70c from 74c, bringing her number to the bottom of Federated's own, new
guidance of 70c-75c from previous 75c-80c. Product markdowns and declining
margins at dept. stores were issues in 1Q and may remain so. Kristiansen has a
hold on the stock, and we know what that means. (GC)
9:39 (Dow Jones) Deutsche Banc Alex. Brown analyst Dennis Harp is raising his
target price on Transkaryotic Therapies (TKTX) to $34 from $28 on his belief
that the biotech's investigational drug Replagal for Fabry disease is superior
to Genzyme Corp.-General Division's (GENZ) drug Fabrazyme. He cited clinical
data that supports Replagal's benefits on cardiac improvement; this data will
be presented at a medical meeting in Vienna. He expects Replagal will be
approved in the U.S. some time this year with sales of $158 million by 2005.
(BMM)
9:29 (Dow Jones) Prudential Securities analyst David Shove lowered his
investment rating for the managed care industry to hold from accumulate and cut
his opinion on several individual companies, including industry giant Aetna
(AET) and Pacificare Health Systems (PHSY). Shove cites concerns about the
current political and legal environment and "first quarter financial results
that brought fresh evidence of rising costs and weaker prices." (JJO)
9:21 (Dow Jones) Lehman still waiting on negative preannouncement from
Caterpillar (CAT), as company guidance incorporates a 2H economic rebound which
is not visible to any other machinery company. Continuing drop in machinery
demand, emerging softening in housing, and reduced capacity utilization rate
conform with Lehman's neutral outlook on many of the machinery-company stocks.
Firm notes the shares have also run up following Fed moves, as investors still
believe that easing leads profit rebounds by 6-9 months. Cuts 2001 EPS view to
$2.40 from $2.52, owing to expected pricing and margin pressures. (TG)
9:10 (Dow Jones) Jury still out on price Citigroup (C) is paying for Mexico's
Banamex, but one thing seems clear: the acquisition gives even greater access
to growing customer base South of the Border. However, the buy is also a bet on
the broader Mexican economy, whose growth has slowed substantially from 2000's
7% rate - expected to be around a third of that this year. That economy
strongly linked via exports to U.S., whose economy we know to be a question
mark. (GC/LF)
9:06 (Dow Jones) The 8K drop in claims "would suggest that payrolls may come
in stronger than we are expecting," say Lehman Brothers analysts. Their
forecast remains, however, for a 75K drop for May. (MSD)
9:04 (Dow Jones) No word yet on the price for the IPO of Tellium (TELM), an
optical equipment maker scheduled to debut on Nasdaq today. But, chances are,
one group of investors isn't going to like this no matter what the price. Price
talk on the deal is $13 to $15, but, even at the high point, the price would be
half the $30 a share investors paid in a private placement in September. (RJH)
8:57 (Dow Jones) Hospital stocks, long viewed as defensive plays, benefitted
from the market's technology slump, and now they're suffering through the
recovery, says Advest analyst Rob Mains. But Mains insists a tech rebound and
strong valuation for hospitals can coexist. He points to 1996, when hospital
stocks enjoyed their highest valuations ever, during a time when "the economy
was humming at a nearly 6% GDP growth rate and both the Nasdaq and S&P 500 rose
20%." (RJH)
8:49 (Dow Jones) For Travelocity (TVLY), the Web wasn't the place to be after
all. In an e-mail to members, the online travel agent said it was starting an
800-number so users could book trips - something they've been doing through the
Web until now. "You might think this is odd, an Internet company introducing an
old-fashioned service over the phone," the company says. "But we understand
that sometimes our members need to talk to someone before completing a
purchase." (RJH)
8:43 (Dow Jones) WR Hambrecht feeling increasingly comfortable with Adobe's
(ADBE) quarterly estimates, as latest monthly data from PC Data show a slight
sequential increase in U.S. retail software sales for Adobe. Acrobat posted
solid April sales, while Photoshop and Illustrator sales declined because of
seasonality and a mature upgrade cycle, Hambrecht says. Price target is $57.
(TG)
8:38 (Dow Jones) Latest jobless claims confirm the bigger decline in the
first week of May and suggest the levels above 400K at the end of April were
anomalies related to seasonals. The 380K is for the May survey week and
suggests the unemployment rate likely to hold steady. (JM)
8:34 (Dow Jones) The dollar has shown little reaction to the 8K fall in
weekly claims. EUR/USD continues to look soft and is reversing gains made since
the Fed decision on Tuesday. EUR/JPY is at Y108.62. USD/JPY is at Y123.20;
EUR/USD is at $0.8812. (JRH)
8:30 (Dow Jones) An even-more-delayed reaction to the Fed? Perhaps that's the
rational we'll hear for the expected mild run up in stocks Thursday morning, on
the heels of yesterday's dramatic gains. Meanwhile,Hewlett-Packard (HWP)
lowers 3Q revenue-range guidance as a result of economic uncertainty around the
globe. There's actually some pretty notable economic data on tap for this
morning: weekly jobless claims, leading indicators, and Philly Fed business
conditions. Money supply after the close. Stock futures firm, overseas markets
generally look good. (TG)
(END) DOW JONES NEWS 05-17-01
10:21 AM |
