MARKET TALK: H-P Might Find Momentum On Its Side
10 Jan 16:16
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
4:19 (Dow Jones) An H-P (HWP) shareholder vote on the company's pending
acquisition of Compaq (CPQ) likely won't be slated until after the companies
get regulatory approval for the deal, which may not come until the end of March
or later. That could work in H-P's favor, buying the company more time to sell
the deal. "In my view, it wouldn't be shocking for the momentum to shift in
favor of this deal," says Steven Cohen, chief investment officer with Kellner,
DiLeo & Co., a New York merger arbitrage firm. "The management is coming out
swinging and they're not afraid to be aggressive about attacking Walter
Hewlett's position. In light of the fact that the vote still could be months
away, it could be very close." At this stage, that's not what the market's
betting. The deal's spread is currently at $3.68, a 25% discount to the offer,
indicating arbs and other investors don't expect a deal at all. (JAW)
4:15 (Dow Jones) Merrill downgrades Instinet Group's (INET) long-term rating
to buy because of "a more conservative market trading volume growth outlook as
well as increased competition and pricing pressure containing profitability
improvement." The firm says Instinet's market share loss trend may reflect
shifting customer loyalty toward lower-cost trade execution venues, suggesting
that the company may need to improve its value proposition. INET shares dropped
0.8% to $8.70. (GS)
4:03 (Dow Jones) A huge tech stock that has held up better than just about
any other, and is near its 52-week high, drops 2%. Something must be up! No,
but that's how this market wants to act. Actually, the Nasdaq managed to close
up, while the DJIA cut the bulk of its losses, but the session's not exactly
one to build on. Today's data were fair, and Friday's PPIshouldn't provide too
big a surprise, so maybe Wall Srteet will start looking to next week's
earnings. DJIA falls 24 to 10069, Nasdaq Comp edges up 2 to 2047, and S&P 500
higher by 1 to 1156 (preliminary). (TG)
3:45 (Dow Jones) The National Association of Manufacturers is asking for a
meeting with Treasury officials to discuss strength of the USD and what NAM
feels is harm to U.S. economy. Not a coincidence the request comes before
O'Neill's trip to Japan later in January. NAM has long opposed "too strong"
USD, but hasn't publicly criticized dollar policy since Sept. 11 attacks. (RF)
3:35 (Dow Jones) Loral Space & Communications' (LOR) Space Systems/Loral unit
Wednesday agreed to pay a civil penalty of $14 million over seven years to
settle charges by the U.S. State Department. Space Systems/Loral and Loral
neither admit nor deny the allegations, which occurred in connection with the
participation of Space Systems/Loral employees on an independent review
committee formed in the wake of a 1996 crash of a Long March rocket in China.
Shares off 1% at $2.95. (CC)
3:25 (Dow Jones) C.E. Unterberg downgraded Juniper Networks (JNPR) to buy
because of valuation, lack of near-term catalysts and potential near-term
market share shifts relative to Cisco Systems (CSCO). The firm notes that JNPR
shares have returned to levels where they were when the company preannounced on
Dec. 20 - and visibility hasn't improved since then. According to Unterberg,
the next meaningful product cycle opportunity for Juniper probably won't occur
until well into 2003. JNPR shares losing 3.4% to $20.40. (GS)
3:11 (Dow Jones) "We forecast no further rate cuts," say GKST's Brian Wesbury
and Maria Forres. "Nonetheless, both the bond and stock markets have already
priced in a stronger recovery than we expect. Look for corrections in each
market." (JCC)
3:05 (Dow Jones) It's deja vu, in reverse. Maybe the bombers have been called
back from Iraq, or Japan's banks are now flush with cash and the balance sheets
are clean! Just as stocks sold off late Wednesday on rumors of Middle East
turmoil and credit downgrades of Japanese banks, stocks are mounting a nice
charge higher late Thursday, or were at least. Nothing dramatic, but they have
pulled mostly out of negative territory - DJIA flat at 10093, Nasdaq Comp adds
10 to 2054, and S&P 500 climbs 4 to 1159. Disney, J&J, and AmEx the big gainers
on Dow, with DuPont pulling up the rear. Apparel retailers still hold top
sector spot. (TG)
2:48 (Dow Jones) Robertson Stephens analyst Harry Curtis upgraded MGM Mirage
(MGG) to strong buy from buy and said the stock should trade at $37 to $39 a
share in the next 12 months. Room rates in Las Vegas seem to be returning to
levels in line with last year, and convention bookings in the 1Q have been
running ahead of last year's bookings, he says. Shares up 2% at $30.51. (DDO)
2:35 (Dow Jones) Pimco's Bill Gross in January investment outlooker article
says USD "is in the process of peaking" and can no longer be counted on to
positively influence inflation downward. As USD weakens, this will tend to
steepen the Tsy yield curve, hurting 10- to 30-year maturities and sending
their yields higher, but with 1- to 3- year yields held fairly low by Fed
keeping interest rates at low levels for much of the year. By the way, his
monthly commentaries always mix entertainment, personal revelation, boastful
talk of whipping challengers and sage financial advice. In this month's
edition, Gross says in his next life he'd like to be either a rock 'n' roll
singer or a reporter. (JNP/MSD)
2:27 (Dow Jones) Talk about lemons and lemonade. A Thursday Wall Street
Journal article airs concerns that retail stocks may have run out of steam
following their recent rally. Daniel Barry, an analyst at Merrill Lynch, says
that's a positive for the sector. "We believe this provides a wall of worry
that is necessary for the bull market to continue," Barry says. Thursday is the
last day for retailers to revise estimates, he adds, and any further revisions
will be to the upside. 4Q earnings will be better than expected for retailers,
and 1Q may be "as strong as any in the past four decades," Barry says.
Highlights surprisingly strong December sales from Wal-Mart (WMT), Target
(TGT), Costco (COST), BJ's (BJ) and Kohl's (KSS). (JMC)
2:11 (Dow Jones) Advent International has raised $1.9 billion for its fourth
global private equity fund, bringing the firms total managed capital to $6
billion. The fund will concentrate overseas, with 70% of its capital planned
for Europe. (RJH)
2:00 (Dow Jones) Santomero says strong dollar signals expectation of
recovery, and that there's been some signs of improvement in the labor market.
He adds the Fed has "flexibility" to cut rates more, if needed. Stocks behaving
a little better - DJIA off 30 at 10063, Nasdaq Comp gains 8 to 2053, and S&P
500 up 2 at 1157. (MSD/TG)
1:52 (Dow Jones) UCAR International (UCR) shares are rising 11% after CSFB
upgrades the stock to buy from hold. The firm applauds the company's
restructuring plan, which UCAR announced Wednesday morning, and projects the
plan - when it is fully implemented in 2004 - will add incremental annual
savings of 69c-75c/share. CSFB raises its EPS estimates for the next three
years and boosts its price target to $16. UCAR shares gaining $1.25 to $12.05
on more than three times its normal volume. (GS)
1:40 (Dow Jones) Fed Chairman Greenspan is slated to speak about financial
literacy later Thursday, which may not make waves. But round two - when he
pronounces on the economy in a speech Friday - could prove a pivotal
market-moving event, say some. Jim Bianco of Bianco Research LLC expects that
on Friday Greenspan "will step up to the podium in San Francisco and tell the
market what he will do on Jan. 30," because dealers and the fed funds futures
are divided in their view of whether Fed will cut rates, or hold at January
FOMC. This time, Greenspan wants "everyone on the same page", Bianco says.
(JNP)
(END) DOW JONES NEWS 01-10-02
04:16 PM |
