Lucent Tech (LU) 10.83 -0.32: CIBC Wrld Mkts reiterates BUY following news that CFO, Deborah Hopkins, has resigned; says this
news should be seen in context of a larger management transition issue; more importantly, CEO Henry Schacht has done a good job in
pulling Lucent out of its immediate crisis, but investors need clarity on whether he or someone else is in charge for the long haul and what
the long term strategy is; firm feels LU is pretty fairly valued at current levels until there is more clarity on leadership/strategy; price target is
$12-$15.
BEA Systems (BEAS) 35.62 -0.36: Dain Rauscher Wessels downgrades to BUY AGGRESSIVE from STRONG BUY AGGRESS
rating and price target of $50; cites lengthening sales cycles, smaller deal sizes, and potential of a slowdown in Europe; longer-term issues
include increasing competition and resultant pricing issues.
09:30 -- 10:00 ET (Updated throughout the hour)******
U.S. Bancorp (USB) 22.12 -0.56: Announces that it has signed a definitive agreement to acquire NOVA Corporation (NIS 29.50
+5.98) in a stock and cash transaction valued at approximately $2.1 billion; under terms of agreement, NOVA shareholders have the
option of receiving 1.407 shares of USB common stock or $31.00 in cash in exchange for each outstanding share of NOVA common
stock; see press release.
Perot Systems (PER) 13.50 +0.27: JP Morgan upgrades to BUY from long-term BUY with an $18 target price; cites positive inflection
in the business; easy comparisons during next three quarters which should amplify the underlying improvement in fundamentals; and record
$7.5 bln pipeline which includes three $1 bln contracts, creating opportunities for positive catalysts going forward; says PER gaining
visibility due to its macro defensibility but is still relatively under owned and under followed.
AFLAC (AFL) 30.50 -0.40: Lehman Brothers downgrades to BUY from STRONG BUY; firm says that more competitors than it had
thought seem interested in taking on AFLAC and that competitors in general seem more confident than that they can compete against the
giant of cancer insurance.
BEFORE THE OPEN (Updated throughout the hour)******
Williams Cos (WMB) 41.67: Announces it has entered into a definitive agreement to acquire Barrett Resources (BRR 67.30) in a $2.8
billion transaction that would more than double Williams' natural gas reserves while significantly enhancing its longer-term ability to
profitably grow its power business; deal provides for a first-step cash tender offer of $73 per share for 50% of the outstanding Barrett
common stock, followed by a second-step merger with a fixed exchange ratio of 1.767 shares of Williams common stock for each
remaining share of Barrett common stock; see press release.
Guitar Center (GTRC) 19.49: Goldman Sachs downgrades to MARKET OUTPERFORM from RECOMMENDED LIST; reasons
include: retail operating income growth has stagnated; GTRC's recent diversification has surprised firm given belief that existing core
businesses still have significant room for growth; and firm's intent as a group to step back from retail stocks given recent outperformance for
the sector.
3Com Corp (COMS) 6.90: Announces an across-the-board reduction in workforce of approximately 3,000 people, including full-time
regular employees and alternative workforce; when completed, reduction is expected to help 3Com return to profitability in fiscal year
2002; full reduction will occur over several quarters; see press release.
L-3 Comms (LLL) 76.96: Supplier of secure communication systems announces that it has acquired KDI Precision Products, provider
of premium fuzing products, for approximately $67.5 million; see press release.
Weyerhaeuser (WY) 57.10: Announced that it has increased the price of its fully financed cash tender offer for all outstanding shares of
Willamette Industries (WLL 48.65) common stock to $50 per share from $48 per share; see press release.
Watson Pharm (WPI) 47.09: Reports Q1 earnings of $0.40 a share, in line with the First Call consensus of $0.40, vs year-ago earnings
of $0.37; revenues rose 67.5% to $296.85 mln from a year-ago of $177.23 mln. Company issues guidance for Q2, expecting
$0.50-0.53 vs current First Call EPS estimate of $0.53; see press release.
Shamrock Logistics (UDL) 28.15: Goldman Sachs initiates coverage with a RECOMMENDED LIST rating and price target of $35;
cites high 8.5% yield; strong organic long-term growth prospects of 6%-8% per year based on existing assets and announced investments;
excellent opportunities to complete accretive acquisitions; and a seasoned, highly incentivized and committed management team; Goldman
participated in underwriting recent IPO.
Proxicom (PXCM) 5.66: E-business consulting and development company announces that it has received a proposal from Dimension
Data Holdings plc. to acquire all of Proxicom's outstanding common stock for $7.50 per share in cash; PXCM recently entered into an
agreement to be purchased by Compaq for $5.75 per share in cash; Proxicom's Board has authorized company to enter into negotiations
with Dimension Data, and agreement with Compaq has a $10 mln termination fee; see press release.
Masco Corp (MAS) 23.00: Reports Q1 earnings of $0.25 a share, in line with the First Call consensus of $0.25, vs year-ago earnings of
$0.39; revenues rose 9.5% to $1.91 bln from a year-ago of $1.75 bln; says Q1 results were negatively impacted by continued softness in
home improvement product markets in North America and Europe, inventory reduction programs throughout distribution system, less
favorable product mix, competitive pricing, weaker foreign currencies and higher energy costs. Company also warns for Q2, expecting
about $0.30 vs current First Call EPS estimate of $0.32; see press release.
Cisco Systems (CSCO) 19.64: Networking giant signs framework cooperation agreement with China Telecom to power ChinaNet
nationwide; under agreement Cisco will provide more than 500 high-speed Cisco 12000 and 12400 Internet routers over the next year to
help China Telecom build an information highway across China; see press release.
Guidant Corp (GDT) 33.00: CSFB downgrades to HOLD from BUY; firm fears that should Contak CD be delayed by the FDA, and
GDT is required to do another study and drug coated stents come to market as expected, GDT would be limited to low teens earnings
growth over the next couple of years; if this were to occur, could see multiple compression to about 15x forward earnings, suggesting a
stock price in the $28-$30 range.
Portal Software (PRSF) 9.28: Company warns that it expects Q1 earnings loss of $0.19-0.21 vs current First Call EPS estimate of
$0.01. "While we anticipated a slowdown in economic spending by technology and communications companies, the overall global
downturn was greater than we had anticipated," said CEO. Company plans to reduce its previously planned expense level for Q2 by
20-25% through a combination of a reduction in workforce, facilities consolidations and asset write-offs; see press release.
Transocean Sedco (RIG) 51.51: Offshore driller reports Q1 earnings of $0.05 a share, $0.02 better than the First Call consensus of
$0.03, vs year-ago earnings of $0.07; revenues rose 82.9% to $550.10 mln from a year-ago of $300.80 mln. "As expected, first quarter
2001 results were hindered by approximately 575 days at zero revenue, caused by scheduled maintenance and repairs on our mobile
offshore drilling fleet," said CEO; see press release.
FedEx Corp (FDX) 41.28: Company warns that its expects Q4 earnings of $0.50-0.60 vs the current First Call EPS estimate of
$0.69; company says deteriorating economic conditions and the rapid decline in the high-tech and other durable goods industries have
increasingly affected FedEx Express volumes; expect economic softness to continue into company's fiscal 2002, which begins June 1,
2001; see press release.
Valero Energy (VLO) 45.47: Announces acquisition of independent refiner Ultramar Diamond Shamrock (UDS 42.71) for $4 bln in
cash and stock, plus the assumption of $2 bln in debt, which will make Valero the second-largest United States refiner of petroleum
products; deal calls for UDS holders to receive a fixed exchange ratio of 1.228 shares of VLO common stock for approx. half of the UDS
outstanding shares (equivalent to about $55.84 per share), and $55 in cash for the remaining shares; see press release. |
