LARRY POLLOCK: Here is a soothing lullaby:
From Barron's 2/24, A.Abelson's editorial:
June 30
Raised fed funds by 0.25% .
Nasdaq +7.4% for the week
Aug. 24
Raised fed funds and discount rate by 0.25%.
Nasdaq +4.2% for the week
Oct. 5
Shifted to tightening bias.
Nasdaq +5.5% for the week
Nov. 16
Raised fed funds and discount rate by 0.25%.
Nasdaq +4.6% for the week
Dec. 21
No action.
Nasdaq +5.8% for the week
Feb. 2
Raised fed funds and discount rate by 0.25%.
Nasdaq +9.2% for the week
All this bodes well for the future.
Relax and enjoy the ride,
:-)
TA
-------------------
Surf and Smurf.
By Alan Abelson
Whodunit?.
Who were the virtual vandals who staged those dastardly
attacks on Yahoo, E*Trade and other icons of the Internet?
The list of possible perps stretches from here to the ends of
the earth. Thanks to our trusty sources in the
cyberunderworld, however, we've been able to narrow
down the likely suspects to a mere handful.
Prominent among them: Steve Forbes. Lending the notion
more than a measure of credibility is the curious
coincidence of his withdrawal as a presidential candidate
and the surf and smurf strikes.
The timing, speculates one of our deep throats, Laryngitis
Lou, may well have been no accident. It could have been
calculated, he proffers, to nicely distract attention from Mr.
Forbes' announcement -- thus easing the way for him, a la
Ross Perot in '92, to jump back into the race at a propitious
moment.
Or, alternatively, it might be the handiwork of Alan Keyes,
to distract attention from the fact he's still in the race.
Incidentally, our contacts scoff at the rumor fingering
Saddam Hussein as the culprit. They point out that Saddam
is strictly a biological- and chemical-terrorism man, that he
doesn't do e-terrorism because, with no body count, what's
the pleasure?
A very live possibility, those in the know in cybercircles
confide, are the supposed victims themselves -- Yahoo,
Amazon, E*Trade, etc., etc. Think about it, before you
dismiss the idea as ridiculous, our informants urge.
The temporary disruptions in service, inconveniences to
customers and even the momentary swoons in their stocks
are dwarfed by the huge potential benefits to the targeted
companies.
In particular, those lucky Webmeisters who have been
beseiged by SYN flooding and digital bombardment now
can blame every bum forecast, every missed estimate,
every revenue shortfall, every failure of profits to
materialize, on those damnable ectoplasmic "hackers" who
jammed their sites. What a godsend!
Frankly, we find this explanation irresistibly appealing.
But even more compelling is the likelihood that the
devilish deed was the work of the notorious Greenspan
Gang.
Driven to wits' end (in this case not a very long drive) by
their inability to dampen the stock market's irrational
exuberance through the usual means, the good governors of
the Fed were forced to take the bull by the horns and do
something bold and radical. So, they craftily plotted and
then stealthily executed the now-infamous online
onslaughts.
You can readily understand the frustration that provoked
Greenspan & Co. to such outrageous but indisputably
necessary action. They'd had it up to here with all that sass
about bubbles. But they were even more fed up with the
feeble results of all their worthy efforts to hose down the
speculative heat in the Street.
Just how futile those exertions proved is laid out in painful
detail by Jim Stack, the estimable proprietor of InvesTech
Research. The record as compiled by Jim dates back to
last June; it encompasses each fateful Fed meeting since,
and the response by the Nasdaq:
June 30
Raised fed funds by 0.25% .
Nasdaq +7.4% for the week
Aug. 24
Raised fed funds and discount rate by 0.25%.
Nasdaq +4.2% for the week
Oct. 5
Shifted to tightening bias.
Nasdaq +5.5% for the week
Nov. 16
Raised fed funds and discount rate by 0.25%.
Nasdaq +4.6% for the week
Dec. 21
No action.
Nasdaq +5.8% for the week
Feb. 2
Raised fed funds and discount rate by 0.25%.
Nasdaq +9.2% for the week
As Jim points out, the latest hike, earlier this month,
produced the greatest weekly percentage gain by the
Nasdaq index in over 25 years.
And of course, after retreating 60-odd points on
Wednesday in its initial reaction to the Website raids,
Nasdaq came back smoking on Thursday, soaring 122
points to yet another all-time peak.
Our hearts go out to Mr. Greenspan and his frantic cohorts.
This latest disappointment has pushed them clear over the
edge. They've succumbed to thinking the unthinkable and
resorting to the most desperate last-ditch measures.
So, Nasdaq beware. Word is, they've sent out an urgent
call for Dr. Strangelove. (Which may explain Friday's little
rout.)
Havoc breeds panic and confusion, two conditions that
are pretty much the norm on Wall Street, anyway. As it
happens, last week's muss and fuss was accompanied by a
touch of panic and a ton of confusion. Not a little of the
latter engulfed giddy investors hot to exploit outfits that
might cash in on the Internet's suddenly glaring
vulnerability to the forces of mischief and mayhem.
Mostly, this mad rush to find
those companies that had
discovered the magic
software to thwart the
hackers, smurfers and other
marauders of the Wild Web
resulted in an outbreak of
mistaken identity. The shares
of companies with "guard" in
their name -- not a few of
them purveyors of underarm
deodorants -- were snapped up. And so were the stocks of
companies barely equipped to receive e-mail much less
prevent even a bumbling online troublemaker from doing
his thing.
A company that is certainly in neither category but
nonetheless seems to have been the subject of some
kindred misapprehension is Keynote Systems. Keynote is
definitely involved in the Internet: It's a Website
monitoring concern that measures e-commerce
performance -- stuff like how long it takes to download
pages -- and supplies diagnostic services. What it doesn't
do, contrary to the widespread belief in the Street (as
evidenced by the spurt in the shares last week from 89 to
125) is provide protection against cybervandals.
However, even without the big boost courtesy of identity
confusion, the stock, as the eloquent chart tracing its
trajectory clearly demonstrates, has been a spectacular
winner since it went public in late September at 14.
Besides its Internet connection, exciting the momentum
masses has been enthusiastic investment sponsorship, a
sensible business plan (as the cliche goes) and, from all
reports, an able management.
---------------------------
Message #17068 from Tunica Albuginea at Feb 16 2000 1:37AM
LARRY POLLOCK , I am so glad you quoted Jill Vardy's column
of today because that gives me an opportunity to read it to you,
( sort of a bedtime story ).
Analysts say the deal will have little impact
on Newbridge, which competes with both
Nortel and Tellabs, but not in the optical
networking side of the telecommunications
business.
End of story,
goodnight,
<vbg>
TA
PS: In regards to the other bedtime story, Jill Vardy's conclusion based
on.....what facts? .......that NN's fall yesterday was due to the TLAB/NT
deal ( rather than to simply the Naz tanking, merrily along ,
with NT,TLAB and CSCO ), is a story I will read to you
tomorrow night. ( Just in case you are one of the " nervous investors "
Jill was alluding to in her post).I am certain it will
immediately lull you back to sleep.
----------
To: Frodo who wrote (17034)
From: LARRY POLLOCK
Tuesday, Feb 15, 2000 1:54 PM ET
Respond to Post # 17047 of 17067
From today's Financial Post:
For Tuesday, February 15, 2000
Newbridge squeezed by
Nortel-Tellabs deal
Investors grow nervous
By JILL VARDY
The Financial Post
OTTAWA - As market rumours continued
yesterday that Newbridge Networks Corp. is
pushing to sign a takeover deal by next week
the company stayed silent.
Newbridge will announce its third-quarter
results on Feb. 22 and analysts believe it wants
a deal in place by then.
News yesterday that Nortel Networks Corp.
and Tellabs Inc. have signed a cross-licensing
agreement initially sent Newbridge stock down
-- it was off 8% at one point -- but it
rebounded later in the day to close up 10c at
$48.75.
Analysts say investors are growing fearful
Newbridge may be having difficulty
concluding a deal that would see French
telecom company Alcatel SA, or some other
big networking company, buy it. Rumours flew
last week that a purchase agreement with
Alcatel would be announced by last Friday.
"According to some people, it was supposed
to happen Friday, and it didn't. And it doesn't
seem imminent today. So people are saying,
Let's take a bit of money off the table," said
Duncan Stewart, technology analyst and partner
at Tera Capital Corp. "Every day that goes by,
people become more worried that it's not going
to happen."
The licensing agreement between Nortel and
Tellabs allows each company to access the
other's optical networking patent portfolios.
Nortel will get royalty payments as a result of
the deal, but no other details were provided.
Analysts say the deal will have little impact
on Newbridge, which competes with both
Nortel and Tellabs, but not in the optical
networking side of the telecommunications
business.
Some investors appeared to conclude the
alliance may reduce the number of companies
interested in buying Newbridge, which
announced on Nov. 18 that it is entertaining
takeover offers.
"Every time a potential bidder joins or leaves
the party, the stock moves up or down like a
yo-yo," said one analyst, who asked not to be
named.
Nortel said it will spend $260-million (US)
and hire 3,400 people to boost its production
of fibre-optic equipment.
Nortel predicts its fibre-optic business will
jump by 30% in 2001. To help meet the
demand, the company will spend about
$64-million (US) on two facilities in England,
$102-million (US) in Ottawa (creating 1,000
jobs in that city alone) and another $84-million
(US) in Montreal (with another 1,000 jobs
created).
Meanwhile, the agreement between Nortel
and Tellabs will strengthen the long-term
competitive position of both companies, the
firms said yesterday. Typically, these
agreements generate some cash for the patent
holders -- Nortel in this case -- and prevent
legal battles from arising as firms bring out
similar technologies.
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