Covad Falls -2: Analysts Doubt SBC Would Be Buyer ã
30 Jan 11:08
By Christine Nuzum
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Profit-taking hit shares of Covad Communications Inc.
(COVD) Tuesday after takeover rumors had sent the stock up for a week.
Covad shares recently trafficked at $4.25, down 47 cents, or 10.3%, on volume
of 7.7 million compared with average daily volume of 8.5 million. On Monday,
Covad's stock rose 26.9%.
"The stock was up on rumors that SBC (Communications Inc.) might be taking
them out," said analyst Rachael Rennert of Gerard Klauer Mattison. "I don't
believe it was institutional interest that was driving the stock up yesterday.
I think it was more of a retail play and those people are probably taking
profits today."
A spokeswoman for Covad declined to comment on the stock price.
Merrill Lynch & Co. analyst Kenneth Hoexter said that a weekend article in
the New York Times drummed up interest in Covad.
Analyst Adam Giansiracusa of Frost Securities Inc. noted that several
telecommunications stocks were suffering Tuesday. Shares of Rhythms
NetConnections Inc. (RTHM) and Network Access Solutions Corp. (NASC), other
wholesalers of DSL, or digital subscriber line, access, were also down. Rhythms
shares recently were down 8.6% to $2 while those of Network Access were down
6.5% to $1.81.
"When a lot of stocks in a group are down and a particular stock has had a
big run over a rumor, you're bound to have a correction," he said.
Giansiracusa and other analysts doubt that SBC would want to buy Covad at $4
a share. Many think that carriers interested in buying DSL assets would rather
wait for troubled companies in the sector to go bankrupt and hold fire sales,
as Northpoint Communications Group Inc. (NPNT) has done. Northpoint has not yet
announced a buyer for its assets.
-Christine Nuzum, Dow Jones Newswires; 201-938-5172
(END) DOW JONES NEWS 01-30-01
11:08 AM |
