MARKET TALK: Level 3 Restructuring 'Unavoidable'?
06 Feb 09:55
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
9:54 (Dow Jones) UBS telecom bond analysts say Level 3 Communications (LVLT)
"could prove to be the last of the domestic high-yield long-haul carriers to
announce a formal restructuring, which we believe may be an unavoidable event."
They recommend an "underweight" position in Level 3 bond and bank debt. Shares
up 1.5% at $2.50. (JD)
9:46 (Dow Jones) Viacom (VIA) is "a tarnished and under-appreciated gem,"
says Merrill Lynch, which makes the stock a Focus 1 selection. Merrill
acknowledges the tough year-ago 1Q comparisons; however, it sees trends picking
up the rest of the year. The firm adds that recent concerns - which are "more
than discounted" in the stock - has less to do with fundamentals and more to do
with asbestos, management feud and accounting scrutiny. The firm places a
$60-$65 12-month price target on the stock, which is up 1.9% at $38.33. (GS)
9:36 (Dow Jones) With the approach of the Olympic Games and the resulting
attention on winter sports, the skiing industry should be poised to glide into
a great season. However, analysts say one well known player is only barely
holding on, even following a recent asset sale. American Skiing's (SKI) recent
sale of its resort in Steamboat Springs, Colo., for about $91.4 million "should
get them through the year," according to Phelps Hoyt, a high yield bond analyst
with Montpelier, Vt.-based KDP Investments. Hoyt says he's taking a
wait-and-see attitude and has a hold rating on the company's 12% senior
subordinated notes due 2006. "They'll start next year as a smaller company but
with less debt, and hopefully with a better economy and normal snow...we'll see
what happens then." (JM)
9:24 (Dow Jones) Procter & Gamble (PG) said in a filing with the SEC that it
had no "material off-balance sheet arrangements or related party transactions"
that have sent investors scurrying of late. P&G wasn't aware of factors likely
to hurt its liquidity other than the risk factors it normally includes in its
SEC filings. P&G did say in the filing it had a contingent purchase price
provision associated with its previous acquisition of Dr. John's Spinbrush that
it expects to settle during 2002. However, the company said the additional
amount it will pay hasn't been decided yet and isn't expected to be material.
(CS)
9:13 (Dow Jones) Lehman analyst Daniel Niles expects Sun Microsystems' (SUNW)
tone to be sober at its analyst meeting later Wednesday and Thursday. Niles
says Sun will likely reiterate its goal for profits by June and a slight
quarter over quarter revenue and gross margin increase for the March quarter.
According to the analyst, who has a market perform rating on Sun, there should
be new product launches at the meeting, which could include low- and mid-range
servers, and network based storage. The Wall Street Journal reports Wednesday
that Sun will unveil a slew of new products involving computer storage
Wednesday. (DLF)
9:07 (Dow Jones) ABN-Amro keeps add rating on FedEx (FDX), saying all three
of company's major divisions are well positioned to benefit from pending
economic turnaround. With Tuesday announcement of expansion of home delivery
operations, ABN-Amro says the company can now cover 90% of the U.S. population.
(TG)
8:55 (Dow Jones) Good productivity numbers are boosting the buck Wednesday,
while rotten jobs numbers harm the EUR, analysts say. EUR is $0.8634; USD/JPY
is Y133.52; EUR/JPY is Y115.31. (JRH)
8:49 (Dow Jones) Morgan Stanley recently spoke with 10 major customers of
Electronic Data (EDS), who indicated that EDS has improved its operational
execution and client communications and has become better at identifying and
recommending value-added outsourcing projects. Morgan Stanley is a little more
positive on EDS' competitive position, but is still concerned about long-term
cash flow generation. Keeps neutral rating. (TG)
8:41 (Dow Jones) The jump in 4Q productivity has helped prompt some light
selling in Treasurys. It was as good an excuse as any to get an early start on
preparations for the 10-year note auction, but stocks remain the wildcard for
the bond market today. (SV)
8:37 (Dow Jones) With Lehman Brothers (LEH) employees heading back to formal
attire, staffers at other investment banks are hoping their firms don't follow
suit (no pun intended). Though some shops say they aren't scrapping their
casualwear policies, follow-the-leader is a game Wall Street plays well. Will
khakis become another casualty of the dot-com era? Gap (GPS) certainly hopes
not. (CWM)
8:36 (Dow Jones) Nonfarm productivity rose by a strong 3.5%, reminiscent of
the best quarters of the 1995-2000 productivity spurt. As a result, unit labor
costs - compensation less productivity - fell by 1.1%. This negates any
inflationary pressure if there had been any. More important, it opens some room
for an increase in profitability. (JM)
8:30 (Dow Jones) Two disappointing sessions may pave the way for some
firmness in stocks Wednesday. Pepsi (PEP) hits views, while someone at Cisco
(CSCO) made a booboo that essentially forced the company this morning to say 2Q
results, to be released in full after the close, topped expectations. Why not
just release it all now, you ask? Probably too late to get the conference call
arranged. More blues for the Emerald Isle - as shareholders there cope with the
Elan (ELN) fallout, Allied Irish (AIB) is dealing with fraud, though the
misdealing took place in the U.S. Stocks look flat now, as do Treasurys. (TG)
(END) DOW JONES NEWS 02-06-02
09:55 AM |
