MARKET TALK: Lehman Bullish On Outsourcing Market
15 Feb 12:15
Edited by Gaston F. Ceron
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
12:15 (Dow Jones) Lehman Brothers says it remains bullish on the
information-technology outsourcing market. "Although not immune to the tough
economic times, the outsourcing sector is considerably more defensive than most
other markets and the pipeline of pending large outsourcing contracts appears
to be at a record level and should start converting to bookings in the next few
months," writes Lehman analyst Karl Keirstead. (GFC)
12:03 (Dow Jones) Last year was dismal for the leveraged buyout business:
Deal volume came in at a scant $23 billion, down from 2000's $41 billion and
the record $63 billion in 1999, according to Buyouts, an industry publication.
"Many buyout firms and banks are mired in deals for which no exit is in sight,"
writes Saratoga Partners' Chris Oberbeck in a recent letter to the firm's
limited partners. "These companies have significant operating challenges, which
require attention and divert focus away from new investments." For the LBO
market to recover, it needs: the recession to bottom, bank liquidity,
continuing recovery of the junk-bond market, and CEO confidence, Oberbeck
writes. No ETA on all of that, though. (JAW)
11:48 (Dow Jones) The Enron ordeal so far seems to have had "minimal fallout"
on business at Alliance Capital Management (AC), says Merrill Lynch analyst
Bill Katz. The asset manager that had the largest exposure to Enron shares said
Thursday its total institutional equity assets declined 2.6% last month - a
number that suggests there was no wholesale departure of institutional clients
upset by their Enron investment losses. Katz noted there is still a possibility
other state pensions follow Florida's lead and pull money from Alliance, but
Merrill is "clearly heartened by a lack of related attrition over the past
couple of months." (YXH)
11:35 (Dow Jones) Measurement Specialties (MSS) shares remain halted after it
disclosed that it canned its chief financial officer and that it is
investigating his actions related to the company's defaulted loans.
Additionally, the maker of electronic sensors said it will restate its 2Q
results and post a significant 3Q loss. The company was expected to release its
3Q today and hold a conference call. That call has been canceled. (ALB)
11:23 (Dow Jones) The problem with off-balance sheet SPEs, which have come
under intense scrutiny in the wake of Enron's collapse, is not the small 3%
investment needed from outside investors, lawyers and accounting experts say.
Rather, it's that such transactions typically aren't clearly footnoted - or
mentioned at all - in financial reports, they say. "If it's off-balance-sheet,
you should have enough disclosure to explain why it is off-balance-sheet and
what it is," says Marc Morgenstern, a managing partner of Kahn Kleinman
Yanowitz & Arnson, a Cleveland law firm. "The real question is, 'Has enough
been disclosed so that an intelligent person can ask the right questions and
get all the information they need?"' (JAW)
11:14 (Dow Jones) At 98.195, May Fed funds are pricing in a roughly 30%
chance of a 25-bps interest rate increase by May, floor brokers said, the
chance having declined from a roughly 40% chance Thursday. (ZHS)
11:10 (Dow Jones) The fall in the share price of troubled biotech ImClone
Systems (IMCL) over the past two months has not made investors happy,
especially those with large stakes. Just ask Bristol-Myers (BMY), owner of a
19.9% stake, which has demanded changes at the company and the relationship
governing the development of colorectal cancer drug Erbitux. Makes one wonder
what FMR Corp., the parent of Fidelity Investments, thinks about the recent
course of events. According to a filing with the Securities and Exchange
Commission Thursday, FMR beneficiallyowns nearly 11 million shares, equivalent
to about a 15% stake in ImClone, as of Dec. 31. Its Fidelity Growth Company
Fund's holdings amounted to 3.9 million shares, or 5.4% of the total
outstanding common shares at Dec. 31. (BMM)
11:03 (Dow Jones) Options of telecommmunication stocks see spiritied trading
Friday as these stocks slide and volatility rise after Standard & Poor's
lowered Qwest Communications' (Q) credit rating. Sprint Corp. (FON), for
instance, is off 36% so far this year and on Friday slipped $1.10, or 8%, to
$12.70, reaching a 52-week low in the process. At least one institutional
investor bought thousands of May 12.50 puts, which locks in until mid-May the
right to sell stock for $12.50 a share. These puts rose 55 cents to $1.30 with
2,000 contracts traded at the CBOE, while 3,153 contracts traded elsewhere,
compared with existing positions of 216 contracts. (KT)
10:54 (Dow Jones) Stocks are bouncing off their lows set following the
worse-than-expected University of Michigan sentiment numbers, but it's hard to
see the market rebounding too far into positive territory, if at all. Lingering
accounging concerns, the cooling confidence figures and an unwillingness to go
long ahead of three-day weekend will likely keep the bulls at bay. DJIA down 3
to 9999, Nasdaq off 19 at 1824 and S&P 500 losing 3 at 1114. (GS)
10:42 (Dow Jones) Steps by the FASB to tighten loopholes that allow companies
to keep billions of dollars in debt off their books won't help curb Enron-like
abuses, nor will it help make such transactions more transparent, some
observers say. The FASB agreed to draft a proposal that companies should report
"special-purpose entities" on their balance sheets if those SPEs have less than
10% in outside equity investment, up from 3% currently. Allen Tucci, a partner
at Tucci & Tannenbaum, a Philadelphia law firm that helps set up SPEs, says the
reason for his pessimism "goes back to the artificial nature of these things.
What companies are really doing is contriving a method to move things off their
balance sheets that meets the technical requirements of the FASB. If those
targets change, the product will just change." (jaw)
10:35 (Dow Jones) High-grade corporates have opened unchanged to slightly
better, says Gary Brown, managing director and head of corporate trading,
Wachovia Securities, Charlotte. Qwest is trading at about 40 to 50 basis points
tighter, following its Thursday drawdown on it credit facilities. The market is
surprisingly active, with sizable pieces trading in all sectors. Everybody is
trying to get done by noon, so that they can go home for the long weekend.
(MCG)
10:30 (Dow Jones) The Economic Cycle Research Institute's weekly leading
index was up 1.4% from its 52-week moving average in the week ended Feb. 8.
Although less than the increases in the prior two weeks, the leading index has
been above its 52-week average in every one of the six weeks of 2002. From
September 2000 through December 2001, the index trailed its moving average.
(JM)
(END) DOW JONES NEWS 02-15-02
12:15 PM |
