MARKET TALK: Well, At Least They're Used To It
24 Jan 14:25
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
2:25 (Dow Jones) Senate Appropriations Chair Robert Byrd, D-W.Va., laments
the upcoming budget and spending cycle for fiscal 2003. "We're setting the
stage for months of wasted time," Byrd said, noting Republicans and Democrats
are seeking political advantage on tax with tax and spending proposals that are
going nowhere. Byrd predicts a giant omnibus spending bill will emerge from
this year's election-year Congress that overspends. (MHA)
2:11 (Dow Jones) Senior leaders and employees of Hewlett-Packard (HWP), in a
survey, support the company's proposed merger with Compaq Computer (CPQ). Board
member Walter Hewlett has cited employee opposition to the merger as a factor
in his own opposition to H-P's merger with Compaq. He has also said that
management's financial analysis of the merger is overoptimistic. At a meeting
in Cupertino, Calif., H-P CEO Carly Fiorina told 220 "senior leaders" of her
company that when the opposition provides "misleading or inaccurate facts"
regarding the merger, the company will correct them. H-P VP Susan Bowick told
the group that about 62% of the company's employees support the deal, based on
a December 2001 internal survey. (BS)
1:57 (Dow Jones) Goldman Sachs analyst Marc Cohen recommends investors swap
their ownership of bottler Coca-Cola Enterprises (CCE) for Pepsi Bottling Group
(PBG), even following CCE's 10% drop yesterday. PBG beat Cohen's 4Q earnings
and EBITDA estimates and continues to display what he calls an "attractive"
valuation. "Unlike CCE, this company has moved its returns up to levels that
exceed its cost of capital and free cash flow is being used to repurchase
stock," notes Cohen. "The only reason for not becoming even more constructive
about PBG is that CCE's poor performance continues topoison investor attitudes
towards bottling stocks." (CEG)
1:47 (Dow Jones) It's likely not a knockout, but Georgia-Pacific (GP)
officials landed a pretty good right to asbestos rumors swirling about the
company. In 4Q conference call, Georgia-Pacific forcefully called rumors about
the company's financial position "ridiculous" and overblown. The company also
said its covered for asbestos costs. The company's combativeness has scored
with investors, who have bid up the stock in heavy trading. (CCW)
1:37 (Dow Jones) FDA approval of Atrix Laboratories' (ATRX) Eligard, which
treats advanced prostate cancer, was a positive surprise, RBC Capital says,
because its was two months ahead of schedule. The firm raises its Atrix rating
to outperform and increases its price target to $33 from $26. ATRX shares are
adding $2.56 to $23.85 on four times normal daily volume. (GS)
1:22 (Dow Jones) Kmart's (KM) secured creditors were cheered by news that
Fleming (FLM) has resumed shipments, with the secured bonds up about 3-4 points
to 61 bid, 63 offered. But Kmart's unsecured debt is still off about 1/2 point
around 47. Food supplier Fleming's bonds are marginally higher, with the 10
1/8% notes of '08 up 1/2 pt at 98 1/2 bid, 99 offered. Kmart shares up 6c at
96c. (RTB)
1:11 (Dow Jones) Raytheon (RTN) is back in growth mode after years of asset
sales aimed at trimming debt. Chairman and chief executive, Dan Burnham, told
analysts that the company "will put more emphasis this year on growth" and
"will be taking a look at acquisition candidates." Any deals will be smallish
and financed in a way that won't hurt its improving balance sheet. The company
plans to slash its net debt to $6.1 billion by year-end, down from $7 billion
at the end of 2001. (SON)
1:03 (Dow Jones) Equities are priced for stellar profit growth, Anderson &
Strudwick strategist Kent Engelke says, something that probably will not occur
in an anemic rebound with no pricing flexibility. According to Engelke, the
Nasdaq is trading around 200x trailing and 80x anticipated profits, and the S&P
is at 45x current and 25x expected earnings, versus an average of 15x. (GS)
12:49 (Dow Jones) Optical component and chipmaker Agere (AGRA) looks cheap,
Soundview Technology analyst Kevin Slocum says Thursday following the company's
fiscal 1Q results. "This was a good quarter by all accounts, only dimmed by the
company not projecting a return to growth next quarter," he says. "Agere looks
cheap at this $5 level, despite the slow turn in the telecommunications market,
potential delays in Lucent (LU) spinning shares and pending debt transactions."
(JDB)
12:35 (Dow Jones) SWS Group Inc., formerly Southwest Securities, is not for
sale despite the retirement of chief executive David Glatstein, a change in
auditors and a proposed spinoff of its asset management and trust business. Don
Buchholz, chairman and CEO, said in a conference call Thursday that the events
- all announced in December - were unrelated and not a prelude to deal.
However, he didn't rule the possibility of a sale down the road. Shares off
0.3% at $22.44. (CUB)
12:24 (Dow Jones) Long-term mortgage rates moved up somewhat this week to
average 6.96% (with 0.7 point) for 30-year mortgage from 6.83%. 15-year rate
also rose to 6.44% (with 0.7 point) from 6.31%. Freddie Mac said quiet trading
in the bond markets kept rates below 7%. (JSX)
12:07 (Dow Jones) Pfizer (PFE) has the group-leading potential of 20% near-
and long-term EPS growth, Robertson Stephens says, because of "an excellent
sales force, a solid stable core of marketed drugs and few near-term patent
expirations. We heartily recommend PFE shares as a core holding for healthcare
investors, especially with PFE shares trading only at a modest 12% premium to
the drug group's 23x average P/E multiple." The firm reiterates its buy rating.
Shares up 0.2% at $41.91. (GS)
11:45 (Dow Jones) Greenspan's testimony highlights what could be a potential
problem in the U.S. economy: service business, like Enron (ENRNQ), that don't
depend on plants and hard physical assets, instead depend on trust. But that
trust can evaporate quickly when things turn bad, because so much of the firms'
value rests on perception. Is he highlighting what could be a growing issue
over the years ahead? (MSD)
11:35 (Dow Jones) EMC's revenue may have fallen 42% from a year ago, but the
company's 4Q earnings results, which beat Wall Street expectations, is further
evidence the storage market bottomed in the 3Q. "EMC saw great seasonal
improvement in the 4Q," says Bill Lewis, an analyst at J.P. Morgan. "EMC is
talking about normal seasonal patterns (in the 1Q). Clearly business has hit a
bottom and now it's the normal progression in a tough economic environment."
While IT spending in 2002 is expected to be flat, analysts, including Lewis,
anticipate spending in the networked storage market. Lewis said there could be
growth in spending of about 10% to 20% this year. Companies that would benefit
include EMC, Emulex (EMLX), Brocade Communications (BRCD), McData (MCDT), and
Network Appliance (NTAP). (DLF)
11:25 (Dow Jones) Greenspan acknowledged this his Jan. 11 speech missed the
mark and with today's remarks, "I tried to rectify that." He added that "the
markets have been assuming a far more rapid snapback than I think is likely to
happen." (MSD)
11:19 (Dow Jones) UBS and Merrill the latest in camp that says Fed will not
move Wednesday. Merrill's Bruce Steinberg cites balanced testimony from
Greenspan, and adds that while we have probably seen the end of the easing
cycle, he doesn't look for a tightening before late summer. (TG)
11:12 (Dow Jones) Glenn Renwick, Progressive Corp.'s (PGR) chief executive,
expects additional premium growth in 2002 in the insurer's commercial auto and
special lines - motorcycle and boats. Renwick noted on a conference call that
Progressive has become the largest insurer of motorcycles in the U.S., with a
25% market share. (CUB)
11:05 (Dow Jones) J.P. Morgan raises DuPont (DD) to buy because of valuation
and "the increasing signs of stabilizing sales volume." The firm suggests a $50
target price, as "demand begins to improve and DuPont makes progress divesting
some of its deteriorating business such as apparel fibers." J.P. Morgan also
thinks DD will eventually become the large-cap chemical stock of choice over
Dow Chemical (DOW) because of Dow's asbestos product liability. Shares up 3.3%
at $42.65. (GS)
10:59 (Dow Jones) J.P. Morgan Chase now says the Fed will hold steady at
1.75% next Wednesday, backing away from an expectation of a rate cut. (MSD)
10:56 (Dow Jones) TXU Corp. (TXU) expects to incur a charge of about $55
million in the quarter ended Dec. 31, 2001, as a result of a recent settlement
with the Texas Public Utility Commissions to resolve issues related to TXU's
transition to competition. The after-tax charge is expected to be accounted for
as an extraordinary item. TXU filed the settlement plan with the commission on
Dec. 31. If approved, it would resolve all major pending issues related to TXU
Electric's transition to competition and would supersede certain ongoing
proceedings that principally are related to deregulation. Shares up 0.2% at
$48.23. (DL)
(END) DOW JONES NEWS 01-24-02
02:25 PM |
