DJ MARKET TALK: More To Retailers Than Thu's Sales Figures
06 Mar 12:32
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
12:32 (Dow Jones) Don't be fooled by potentially ugly retail sales figures on
Thursday, Prudential Securities says. The firm expects retailers to report
lower-than-anticipated sales growth in February but continues to recommend an
overweight position in the group. What's the basis for Prudential's optimism?
Lower interest rates as well as tax cuts in 2001. (GS)
12:18 (Dow Jones) Xerox (XRX) may have raised $2 billion in asset sales since
December, but analysts say the company still has to focus on cutting costs and
stemming market share losses in order for it to return to profitability. In
fact, Benjamin Reitzes, a UBS Warburg analyst, said in a research note Tuesday
that Xerox "still faces fundamental challenges." Maybe that's why the stock is
only up 4%. (DLF)
12:12 (Dow Jones) FAA is about to skip competitive bidding and give Lockheed
Martin (LMT) the job of replacing computers at its high-altitude air traffic
control centers to speed up the much-needed air traffic control modernization,
according to the NY Times. So why is the stock down 2.9%? "This is a very
long-term thing and just sort of blends in with their other future business
without causing any huge jump (in) potential future earnings," says JSA
Research's Nisbet. (SON)
11:54 (Dow Jones) Investors are dumping their virtual memory of the economic
hardships that recently wreaked havok on the computer sector as positive
coments out of Veritas Software (VRTS) and Dell Computer (DELL) are helping
reboot the entire group Tuesday. Veritas said late Monday demand for its data
storage software remains strong, and analysts say this is one sign the economic
downturn may not be as grave as expected. Dell continues on its positive tear
after Michael Dell and other execs made enthusiastic comments about its new
top-line growth oriented business model to Merrill Lynch Friday. (HHH)
11:49 (Dow Jones) Huge $16 billion-plus France Telecom (FTE) deal is giving
the corporate bond market a positive tone. "You look at that and think there
must be good demand for corporates," said one fund manager. Corporate spreads
are in around 1-2 BP while telecom spreads have come in around 5 BP. (CSE)
11:42 (Dow Jones) Shares of Circuit City's Circuit City Group (CC) and CarMax
Group (KMX) went in opposite directions, after the electronics megastore chain
said it sees its current sales slowdown continuing through the first half of
fiscal 2002, while the auto sales group projects a peppy 5% to 10% same-store
sales growth for the fiscal year. (KMM)
11:34 (Dow Jones) J.P. Morgan H&Q's Greg Smith says that trading data from
Datek Online Brokerage Services "confirms our suspicions that February was an
exceptionally weak month for retail investors." Other online brokers will be
reporting February numbers over the next few weeks, and Smith expects they will
show "sharp sequential declines over January levels." Datek, a unit of
privately-held Datek Online Holdings Corp., saw its February average daily
trading activity drop 22.2% from January and 22% from February 2000. Shares of
online brokerage firms, though, are mostly up. (GFC)
11:29 (Dow Jones) Don't expect any quick profits from the Xbox game console
that Microsoft (MSFT) will launch later this year. Merrill's Henry Blodget
estimates that the Xbox business will generate $2B in losses over the next five
years. But he figures it could produce $500M-$1B, or 6c-11c a share, in
operating profits in FY 2006. Blodget also says it will be "very challenging"
for the Xbox to unseat Sony's (SNE) PlayStation 2, given Sony's head start and
installed base. (MLP)
11:23 (Dow Jones) Brokerage stocks rise Tuesday despite Salomon Smith
Barney's 1Q estimate cuts, but analysts say there's no indication that a bottom
has been reached by the sector. Dean Eberling of Keefe Bruyette & Woods calls
the market reaction a "dead cat bounce." (LMC)
11:15 (Dow Jones) As technology names lead stocks higher Tuesday, options
investors focus on buying near-month, at-the-money or just out-of-the-money
calls in tech companies such as Compaq Computer (CPQ), Dell Computer (DELL) and
Sun Microsystems (SUNW). Investors either are buying these bullish calls to
participate in the tech stock rally, or buying back calls they had sold in
prior weeks as tech stocks slid, since many of these positions have large open
interest. (KXT/CWM)
11:09 (Dow Jones) France Telecom's (FTE) $16.4B equivalent bond just launched
establishes new record as largest corporate bond to date. (CBS)
11:00 (Dow Jones) What would make for a real bottom in chips, which are up,
on average, 8% Tuesday, amid expectations that all the bad news has been
acknowledged? Traders say there are two names - Pericom Semiconductor (PSEM)
and Transwitch (TXCC) - that have yet to warn. Of course, the market tends to
turn up before the bottom is established, but when those two bow to the
inevitable, then truly all the bad news will be out there. (ROB)
10:51 (Dow Jones) Traders in March Nasdaq are keeping an eye on buyers. In
Monday's trade, floor traders say a large professional trader stepped in and
bought up a sizable quantity. Traders thought it was new longs, but judging by
only a small increase in open interest, it's possible it might have been short
covering. No standout trades early. (DMC)
10:44 (Dow Jones) AT&T (T) is in a stronger position to sell more of its
cable subscribers following a ruling that overturned ownership regulations that
had prevented companies from serving more than 30% of the nation's TV markets,
says UBS Warburg analyst Thomas Eagan. With 24.1 million subscribers, AT&T
Broadband is the only cable operator directly affected by the ruling, but Eagan
still sees pending AT&T subscriber sales continuing. The sales are "driven more
by financial issues (reduction of debt) than by regulatory concerns," he says.
However, the ruling does improve AT&T's negotiating power "by reducing any
regulatory imperative related to the subscriber sales.". UBS considers the
ruling a modest negative for the remaining cable operators because it will
improve AT&T's bargaining position. (JAW)
10:34 (Dow Jones) Stocks looking real good. SOX up nearly 8%, with Intel
higher by almost 7%. No surprise, talk of bottom heats up, partly on good
reaction of some tech names to further bad news. That's certainly true, and
maybe worst has passed, but remember back when Intel warned about soft 4Q on
Dec. 8? The stock rose in after-hours trade, and the next day, and others also
acted well. This time may be different, but the Nasdaq went from 2900 back then
to around 2200 now. It looks like the economy is in better shape now than it
was then and inventories are more healthy, but while most of us would like to
see stocks recover, one or two days of nice bounces doesn't necessarily mean
THE bottom has been hit. DJIA up 108 at 10670, Nasdaq climbs 89 to 2231, and
S&P 500 adds 22 to 1264. (TG)
10:20 (Dow Jones) Xerox Corp.'s (XRX) sale of its 25% stake in Fuji-Xerox Co.
to Fuji Photo Film Co. (FUJIY) will probably be followed by a major
restructuring at Xerox, said Credit Suisse First Boston analyst Gibboney Huske.
She adds that even with a return to profitability in 2002, liquidity will
remain tight at Xerox barring an upside earnings surprise on asset sales or a
meaningful reduction in exposure to the financing business. (DDO)
10:13 (Dow Jones) EUR/USD popped up on release of January U.S. factory
orders, which declined much more than expected, down 3.8% from December's
revised rise of 0.6%. But ex-transportation, January orders were down only
0.3%, which markets seemed to quickly process, sending EUR/USD back to previous
levels. EUR/USD at $0.9280; USD/JPY at Y118.65. (JEN)
10:09 (Dow Jones)Merrill Lynch's Kevin Simpson started coverage of Oil
States International Inc. (OIS) with a buy rating. He views the oil-services
company as a play on the later half of the oil cycle. Oil States came public in
mid-February with Merrill, CSFB, and Simmons as its underwriters. Until
Tuesday, the stock had yet to peak above its opening day high of $9.50, but
Simpson sees the stock going to $18 within the next 12-months as investor
confidence builds. (CCC)
10:04 (Dow Jones) Factory orders fell by 3.8% in January, pulled down by the
fall in orders for durable goods, which were revised downward (-6.5% instead of
-6.0%). The decline was consentrated in aircraft. Orders for nondurable goods
were only down 0.2%. (JM)
(END) DOW JONES NEWS 03-06-01
12:32 PM |
