MARKET TALK: Qwest Bashing Has Created Opportunity
06 Aug 11:00
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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MARKET TALK can be found using code N/DJMT
10:59 (Dow Jones) The sustained selloff of Qwest Communications (Q), which
pushed shares to a 52-week low last week, has created an excellent buying
opportunity, says Thomas Weisel analyst Jim Linnehan. Last week, BellSouth
(BLS) sold some of the 11.1 million Qwest shares that came off lockup in
February. In addition, weak results by long-haul peers and accounting treatment
of capacity sales and their associated costs has pushed Qwest's stock down.
"Qwest has minimal capacity sales and does not need them as a source of
funding," Linnehan says, before noting that Qwest trades at only 44% of its new
estimated EBITDA growth rate, versus and average of 89% for long-distance
service providers and 111% for regional Bells. Shares up 0.5% at $24.51. (JDB)
10:48 (Dow Jones) Motorola's (MOT) $825 million sale of its integrated
information systems group to General Dynamics (GD) generates needed cash to
strengthen the telecommunications equipment maker's balance sheet, says
Deutsche Banc analyst Brian Modoff. "We never considered IISG to be a part of
Motorola's core business and its loss should have no impact on Motorola's
future position or strategic initiatives," he says. Modoff maintained his
market perform rating on Motorola. Shares unchanged at $18.62. (JDB)
10:40 (Dow Jones) Stocks, as expected, under moderate pressure, with techs
generally leading the way lower. Intel weakest link on Dow, off 4.2%, and IBM,
Microsoft, and H-P all slipping, too. SOX off 1.6%, but biotech manages some
strength. Technicals still in limbo, while the week's economic numbers could do
something to address that, starting with productivity data tomorrow. DJIA off
54 at 10458, Nasdaq drops 19 to 2047, and S&P 500 falls 7 to 1206. (TG)
10:29 (Dow Jones) As stocks slid early Monday, protective puts traded
actively and the CBOE's put/call ratio for equity options reached a high 0.97.
Many contrarians consider the ratio to be bullish when it rises above 0.75. But
the bullish signal isn't backed up on the index-option side, where the put/call
ratio is at a neutral 1.07. (KT)
10:24 (Dow Jones) A Bob Evans Farms (BOBE) shareholder is seeking approval to
auction the company to the highest bidder. "In my opinion a strong or a
majority vote by the shareholders would send a clear message to the board of
the displeasure felt over many years with regard to the return on their
investment and the drastic action that needs to be taken," Deborrah Donskov's
proposal said. Donskov has further requested that if her proposal is adopted by
stockholders, Bob Evans' management and board should interpret it as a message
that it's no longer acceptable for the board to continue with its management
plan and strategies. (DL)
10:14 (Dow Jones) Analyst at a European bank says Marconi (MONI) "very
likely" to slip into junk category in next 6 month. Company has to carry out
writedowns of inventory and goodwill, and its product range is too narrow to
benefit from an upturn in time to save ratings. (RGB)
10:11 (Dow Jones) Job cuts announced for July totaled 205,975, according to
outplacement firm Challenger, Gray & Christmas. The monthly decline was the
largest since the survey's inception in 1993. For the year, job-cut
announcements total 983,337, surpassing the 677,795 job-cut pace seen in 1998.
(MSD)
10:05 (Dow Jones) Signs of a quicker-than-expected recoup at RSA Security
(RSAS)? Frederick Ziegel, Tucker Anthony Sutro analyst, says checks with
salespeople at the company suggest some deals expected to be delayed until 2002
may actually start in the 4Q. While revenue and earnings will still come in
below targets set early this year, the signs of life in RSA's pipeline provide
"some evidence that RSA's final quarter is strengthening," he said. RSA
recently down 45c at $24.61. (RR)
9:53 (Dow Jones) Biotech is poised to enjoy a strong finish to 2001, says
Robertson Stephens analyst Michael King, who isn't worried that the AMEX
Biotechnology Index is down 17.2% compared to a 16.4% fall in the Nasdaq Comp.
In the past 10 years, almost all of the upward movement for the AMEX Biotech
Index occurred in the last five months of the year, he says. Other drivers
include significant data presentations at academic conferences; appointment of
a new FDA commissioner; and approval of Amgen's (AMGN) potential blockbuster
Aranesp. He advises investors to accumulate positions in leading large and
mid-cap companies before the fall academic conferences so they can benefit from
the full effect of this rally. (BMM)
9:41 (Dow Jones) Plenty of technical negatives, says Lehman's Jeff deGraaf -
too much complacency, negative seasonal influences, G7 markets in well-defined
downtrends, and inability of stocks to sustain any meaningful momentum. But
there's also a bullish development - a pattern of heavier volume advances
relative to light volume declines. This pattern reflects accumulation, and
would be more bullish if momentum could gain some traction, deGraaf says. (TG)
9:33 (Dow Jones) Marconi (MONI) holds on to an investment-grade rating from
S&P: cut to BBB- from BBB+, with a negative outlook. Short-term cut to A3 from
A2. "If the financial profile of the group does not recover in line with
expectations...the ratings could be lowered. Moreover, the timing and the
extent of market recovery are highly uncertain and largely beyond Marconi's
control," says S&P. (RGB)
9:26 (Dow Jones) The AFS Title Search Index, an indicator of housing turnover
and refinancing, fell 4.8% to 160.9 for the week ended July 27 from 169.1 the
week before. The week's decline in title activity happened at a time when
mortgage rates fell to near 7% and the MBA refi index increased by 3.9% in the
period. (JSX)
(END) DOW JONES NEWS 08-06-01
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