MARKET TALK: 2002 EPS Growth Won't Be There For Williams
29 Jan 14:35
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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2:35 (Dow Jones) J.P. Morgan wasted little time in downgrading Williams Cos.
(WMB) to market performer after the energy company delayed the release of its
4Q report because of issues related to debt obligations. The firm blamed the
rating cut on its forecast of negative earnings growth in 2002, management
turnover given CEO Keith Bailey's retirement in May, and outstanding Williams
Communications (WCG) exposure. WMB shares losing $5.05, or 21%, to $19.06.
(WMB)
2:17 (Dow Jones) Philip Morris (MO), set to report its 4Q and year tomorrow,
may also announce its successor to Chairman and CEO Geoffrey Bible, who is due
to retire in August. Since Feb. 27 is the only other date the board is
scheduled to meet before the annual meeting in late April, there is speculation
that a vote may come during the Wednesday board meeting. Front runners are CFO
Louis Camilleri and U.S. tobacco chief Mike Szymanczyk. An outsider is thought
to be unlikely. Shares flat at $49.95. (CEG)
2:12 (Dow Jones) Feb. fed funds have gained a basis point in the course of
the session, with a last price of 98.275. That leaves the contract pricing in a
10% chance of a 25 basis point cut by the end of this week's FOMC meeting,
trader says. That compares to Monday's 6%. (CMN)
2:02 (Dow Jones) Deutsche Bank strategists say real bond yields compare
favorably to real equity yields in the U.S., and, to a lesser extent, in
Europe. U.S. corporate bonds are particularly cheap relative to equities. Being
long U.S. corporate bonds versus the S&P index offers a "quasi-arbitrage"
opportunity. Strategists find that the probability of equities outperforming
bonds over the next 20 years is now at 37% in the U.S. (MCG)
1:53 (Dow Jones) "We expect earnings to surprise positively in 1H02 but to
fall short in 4Q02," Morgan Stanley strategist Steve Galbraith says, adding
that analysts excessively cut 4Q01 expectations but left 4Q02 at high levels.
So how should investors play positive near-term earnings surprises but a 4Q
shortfall? "We would err on the side of defensive stocks. We also like the
clear sector leaders that are likely to gain share in this environment." (GS)
1:45 (Dow Jones) National Commerce Financial (NCF) said it won't pay
management bonuses in 2002 if the company doesn't achieve a 14% cash earnings
per share growth. National Commerce said cash EPS must grow by 18% before its
executives can earn maximum bonuses in 2002. In addition, the company said its
2002 bonuses are tied to a 22% increase in cash return on tangible equity. (DH)
1:34 (Dow Jones) Certain corporate bonds are taking a battering as investors
shun names tinged by bad news or association in recent days. Worldcom (WCOM)
and Williams (WMB) bond spreads are out by as much as 20 basis points. Other
names being quoted wider include Tyco (TYC), Household (HI) and EDS. The
general market is holding in fairly well with spreads generally out about 2-4
basis points. (CSE)
1:18 (Dow Jones) Hard to pinpoint why shares of CryptoLogic (CRYP) are down
11% Tuesday. Investors may be concerned the online gaming software maker will
offer a gloomy fiscal 2002 outlook when it reports its 4Q results Feb. 4,
analysts said. The Toronto company issued a 4Q earnings warning on Jan. 7,
citing increased credit card rejections for its licensees. In addition,
investors could be concerned about further delays in the launch of an online
casino by U.K. casino operator Littlewoods, a CryptoLogic licensee, analysts
said. The casino, which was supposed to be up and running already, is scheduled
to open in the 1Q of 2002. CryptoLogic is down $1.53 at $12.13. (SEW)
1:06 (Dow Jones) Morgan Stanley downgrades Automatic Data (ADP) to
underperform from neutral. "Driven by the maturation of the U.S. payroll
processing market, in our view, ADP's long-term growth rate will slow. We
believe such slowdown will compress the stock's premium P/E multiple. We are
also lowering our view of ADP's intrinsic value to $50 per share from $60."
(GS)
12:57 (Dow Jones) NAM says rebound in orders provides "first credible
evidence the investment-led recession may be behind us." But it cautions that
"the overvalued dollar and continued weak demand overseas will continue to
depress exports in 2002," constraining need for more plants and equipment, and
also bemoans lack of action on a stimulus package to encourage more capital
investment. (JCC)
12:46 (Dow Jones) In an effort to get its viewpoint out on the proposed
merger of Hewlett-Packard (HWP) and Compaq Computer (CPQ), which has been
embroiled in a contentious proxy battle, led by Walter Hewlett, son of one of
the co-founders, H-P has launched a new Web site www.votethehpway.com. At the
site, visitors can learn about the merger benefits, catch up on the latest news
on the merger, read SEC filings, and sign up for e-mail updates on the progress
of the merger. (DLF)
12:36 (Dow Jones) Things have turned even uglier for stocks, with the Dow off
170 at 9697, Nasdaq Comp down 43 at 1900, and S&P 500 falling 22 to 1111.
Spencer Clarke strategist Michael Sheldon says a close below 9700 yields 9000
on the DJIA, and a close of less than 1850 on Nasdaq means 1700 will be next.
GE, Williams, Cendant, Tyco all getting lumped into "accounting/credit issue"
camp. Futures trader says that on a day when things should probably be headed
sideways, it looks like new shorts have taken hold. (TG)
12:28 (Dow Jones) Lehman expects EOG Resources (EOG) to announce a reduction
in 2002 capital spending, thus hurting production growth, when it reports its
4Q before the market opens Wednesday. "While we will await formal guidance
before changing our production forecast we anticipate that we may need to lower
our 2002 production growth forecast from 4.8% currently (including 4% in North
America) to a range of -2% to +3%." Such a change would force Lehman to cut its
EPS forecasts by up to 15 cents for 2002 and 2003. (GS)
(END) DOW JONES NEWS 01-29-02
02:35 PM |
