MARKET TALK: IBM, Microsoft Set Soft Tone
18 Jan 16:04
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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4:03 (Dow Jones) It's tough for major averages to combat 5% drops in both IBM
and Microsoft. That said, the weakness that lasted the entire session did wane
towards the close, at least a small positive. Part of the selloff was likely
due to unwillingness of some players to want to carry a load into a long
weekend, not to mention the less-than-stellar outlooks from IBM and Microsoft.
Technically, things point lower, too, and there's another big week of earnings
coming. Lost in the selloff is another dose of economic data that suggests
something better might be brewing. DJIA drops 79 to 9770, Nasdaq falls 55 to
1930, and S&P 500 loses 11 to 1127 (preliminary). Go Eagles. (TG)
3:40 (Dow Jones) Dollar General (DG) adopted accounting controls recommended
by its audit committee and hired a senior director of internal audit. In a
conference call, CFO Jim Hagan said some of the recommended accounting controls
include enforcing accurate and disciplined account reconciliation, revising
supervisory roles and "spans of responsibilities within the financial
function," and hiring additional experienced accountants. Dollar General
restated its financial statements for its last 3 fiscal years and the three
quarters for its current fiscal year ending Feb. 1. President and COO Don
Shaffer says the company hired Jim Brigham as senior director of internal
audit, which is a new position. (GL)
3:25 (Dow Jones) Big Sky Transportation (BSA) is seeking shareholder approval
to offer additional common stock, preferred stock or convertible debt
securities. Big Sky wants the approval to raise capital to deal with the
financial impact of the terrorist attacks. The company said it lost revenue of
about $1.1 million and profits of about $500,000 through Dec. 31, 2001, because
of the attacks. Consequently, its working capital has also been reduced and
recovery of passenger traffic and revenue to pre-attack levels isn't likely to
occur until late spring of 2002. (CC)
3:06 (Dow Jones) As the company's 100-year anniversary kickoff draws near,
Harley-Davidson (HDI) is ready to get it in gear. Goldman keeps outperform
rating, calling the 4Q results posted last night powerful. Shares have been
very volatile, but firm is impressed with Harley's strong fundamentals in a
tough economy, and shares have significant momentum approaching anniversary.
Shares off 1.6% at $53.45. (TG)
2:44 (Dow Jones) Treasurys closed up moderately Friday as position-squaring
and weakness in stocks lifted prices. Earlier, prices fell after the University
of Michigan January mid-month consumer sentiment index jumped to 94.2 from 88.8
in Dec. Activity ended at 2 p.m. and the U.S. market is closed Monday for
Martin Luther King Day. The 10-year rose 11/32 to 100 26/32 and its yield
dropped 5 BP to 4.89%. At the longer end, the 30-year was up 24/32 to yield
5.36%. (MLM)
2:34 (Dow Jones) Human resources outsourcer Exult (EXLT) announced Thursday a
10-year $700 million mega-deal with Prudential Financial (PRU) to take over
many of its back-office tasks, a major endorsement by Prudential, according to
Bear Stearns analyst Jim Kissane, of Exult's outsourcing strategy. But the cost
associated with laying the infrastructure of such a contract may delay Exult's
profitability until the 3Q of 2002, from the previously anticipated 2Q, Kissane
asserts. Though the analyst tells investors that the stock is "attractive," and
offers "upside to long-term investors", Kissane is looking for "more evidence
on the profitability front." Shares up 4% at $13.75. (ALF)
2:22 (Dow Jones) Sun Micro's (SUNW) long-term picture is bright, Thomas
Weisel says. The firm says it's likely to bump up its revenue view, though not
change EPS outlook. New product momentum is strong, and the balance sheet is
solid. As the year progresses and operating results and orders improve,
earnings leverage should emerge. Shares off 1.6% at $12.17. (TG)
2:05 (Dow Jones) If you look at a chart, this one makes sense. Nine days
after downgrading the shares of Neoforma (NEOF) to buy from strong buy, WR
Hambrecht ups the shares back to strong buy. Yes, it's a valuation call - the
shares were down 37% over the past week or so, prior to Friday's 11% jump. The
fundamentals are as solid as ever, and there's plenty of upside in the shares
given Hambrecht's $33 target. Stock up $2.15 at $21.45. (TG)
1:52 (Dow Jones) Major stock averages are taking in an interesting tug-of-war
Friday. Dell and consumer sentiment on the one side, Microsoft, IBM, and
Monday's holiday on the other end. Feeling in futures pits is traders don't
want much part of this going into long weekend. After busy, busy week, things
likely to slow more as end of session nears. DJIA off 50 at 9799, Nasdaq off 36
at 1949, and S&P 500 eases 8 to 1130. (TG)
1:37 (Dow Jones) Biopure (BPUR) expects to report a net loss of between $1.60
and $1.80 a share for the fiscal year ending Oct. 31, compared with the $1.48 a
share loss expected by analysts. The company expects the net loss for the first
two quarters of the year to be higher when its Cambridge manufacturing plant
will be shut down and before it begins sales of Hemopure in South Africa, where
the blood substitute is approved for use in surgical patients. The company
expects operating expenses to be between $44 million and $48 million for the
fiscal year. (CS)
1:20 (Dow Jones) While topping Prudential's 2Q EPS view by 2c, ADP fell well
short of the firm's revenue outlook. ADP also lowered revenue growth
expectations, but Pru says those revised estimates may still be too high,
noting that ADP's recovery will lag that of the general economy. Keeps hold
rating, $55 target. Shares off 1% at $57.15. (TG)
1:11 (Dow Jones) The National Association of Manufacturers faces a tough task
in seeking to sway the Bush administration from the strong dollar policy when
NAM reps meet with top Treasury officials later Friday. Treasury Undersecretary
for Intl Affairs John Taylor told reporters that focusing on corporate
productivity and wider economic growth, and not fretting about the prevailing
exchange rate, is more important when determining policy. (DM)
12:53 (Dow Jones) Network Associates' (NETA) stock rallied 9% Friday after
the Internet-security software company reported 4Q pro forma earnings that beat
Wall Street estimates by a remarkable 15 cents. The company's more modest 7c
boost to its 2002 outlook initially hurt the stock, but it rebounded on the
notion that management is simply being conservative. The stock opened down, but
was up 9.2% at $29.16 recently. (RR)
12:37 (Dow Jones) Salomon says recent Tyco (TYC) weakness is way overdone and
creates nice opportunity to get in for investors with a horizon of more than a
few months. Shares trade at less than 12 times the firm's calendar 2002
estimates, and Salomon says speculation that Tyco Electronics lost share in the
latest quarter is clearly not true after seeing competitor earnings reports.
Keeps buy, $75 target. Shares off 4% at $43.15. (TG)
12:23 (Dow Jones) The Euro's weak rally in NY has now taken it to its best
levels of the day as traders worry that the USD's gains may be overdone.
EUR/USD is $0.8846; USD/JPY is Y132.58; EUR/JPY is Y117.31. (JRH)
12:11 (Dow Jones) Much is made of the underwriters league tables for debt and
equity issuance in a given year, but, for law firms advising those deals, it
can be equally competitive. This year's law tables, compiled by Thomson
Financial, on the one hand are little changed: the top three advisory firms for
2001 - Sidely Austin Brown & Wood, Orrick Herrington & Sutcliffe, and
Cadwalader Wickersham & Taft - all held those same spots in 2000. What did
change was everyone below them. Because of the slowdown in IPO business firms
in the top 10 in 2000, like Cleary Gottlieb, fell dramatically, in this case to
11. Skadden Arps, which was 14th in 2000, moved up to fifth last year. (RJH)
11:54 (Dow Jones) The valuation on Xilinx (XLNX) is high relative to the
company's low visibility, SoundView says, so don't be aggressive on the stock.
If you want to play the space, try Altera (ALTR) as a stock with similar, solid
fundamentals, but which is trading at a discount to Xilinx. Inventory
replenishment is done at Xilinx, but underlying business is still weak. Keeps
buy rating, price target is $46. Shares off 4% at $41.25. (TG)
11:43 (Dow Jones) Lehman expects index of leading economic indicators to rise
by 1.5% month-over-month in December. Expect December's will show a $28B budget
surplus. Look for receipts of $190B as corporate receipts softened while
outlays slide by $6B as roughly $12B in spending was shifted into November. For
the year, expect a $14B surplus. (MCG)
11:23 (Dow Jones) '"We are not overly bearish or bullish, but believe that a
general oversold condition within the markets will provide a better opportunity
than chasing strength," says Lehman technician Jeff deGraaf. (TG)
(END) DOW JONES NEWS 01-18-02
04:04 PM |
