MARKET TALK: Heads Up On VeriSign
24 Jan 16:02
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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4:04 (Dow Jones) Be careful when Internet firm VeriSign (VRSN) reports 4Q
results after market close. The First Call consensus estimate is pro forma
earnings of 19 cents a share. But if VeriSign says it earned, say, 30 cents a
share, it might not be the trouncing it first appears to be. That's because the
analysts' consensus, at VeriSign's direction, pretends the company pays a 40%
tax rate; in reality, they pay minimal taxes. For the past three quarters,
VeriSign's earnings announcement has highlighted the earnings figure with
minimal taxes. Only later did VeriSign disclose that the "apples-to-apples"
earnings number, reflecting the 40% tax rate, beat the consensus by a slimmer
margin. Could happen again. (PDL)
4:02 (Dow Jones) Stocks take a major amount of news in, and handle it well.
Forget about a rate cut next week, because the economy is stabilizing,
Greenspan says. For how long, we don't know. Big tech earnings help, and more
is on the way. DJIA adds 60 to 9790, Nasdaq Comp adds 20 to 1942, and S&P 500
higher by 3 to 1131 (preliminary). (TG)
3:53 (Dow Jones) Trico Steel won authority to execute a $116.7 million sale
of substantially all of its assets to a wholly owned subsidiary of Nucor (NUE),
the second largest steelmaker in the nation. The sale will close no later than
Aug. 30. The order signed by the U.S. bankruptcy court paves the way for the
company to submit a reorganization plan. Trico has the exclusive right to file
the Chapter 11 reorganization plan through March 22. (TB)
3:37 (Dow Jones) Qualcomm (QCOM), Starbucks (SBUX), Gateway (GTW), JDS
Uniphase (JDSU), VeriSign (VRSN), Alltel (AT). All great corporate names, yes.
And all reporting tonight, among so many others. (TG)
3:19 (Dow Jones) Halliburton (HAL) shares are cheap based on underlying
fundamentals, Morgan Stanley says. New claims filed against the company fell
for the second straight quarter and costs of closing claims remained in line
with the company's historical experiences. The 4Q was sound, despite drop in N.
American drilling activity. Keeps outperform rating, $25 target. Shares up 24%
at $13.40. (TG)
3:01 (Dow Jones) Pru likes Coach's (COH) 2Q results, but keeps hold because
of rich valuation. Impressed with success of Signature, believes Coach is
well-positioned for Valentine's Day, and says it's pretty easy to get 10c to
15c of upside to its fiscal 2003 estimate from Coach Japan. Shares up 3.7% to
$44.60. (TG)
2:53 (Dow Jones) Ariba (ARBA) said its severance agreement last October with
Lawrence Mueller, its former president, chief executive and COO, provides for
about $2 million lump sum cash payment and two million fully vested shares of
common stock. For 2001, Mueller also received a salary of $240,625, bonus of
$79,707 and options of 5 million shares, before he left in July 2001. If he had
served the entire year, Mueller's salary in 2001 would have been $500,000. The
company said it also granted Mueller about $7.8 million in restricted stock
awards in 2001. Shares up 4.7% at $5.57. (JM)
2:34 (Dow Jones) Kmart's (KM) financial struggles could aid Lowe's Cos.'
(LOW) lawn and garden business, given that Kmart has a substantial share in the
category, Merrill analyst Peter Caruso says. Lowe's management has also
indicated it will review any property Kmart gives up for potential new stores
in high-quality sites, he said. (MEL)
2:25 (Dow Jones) Senate Appropriations Chair Robert Byrd, D-W.Va., laments
the upcoming budget and spending cycle for fiscal 2003. "We're setting the
stage for months of wasted time," Byrd said, noting Republicans and Democrats
are seeking political advantage on tax with tax and spending proposals that are
going nowhere. Byrd predicts a giant omnibus spending bill will emerge from
thisyear's election-year Congress that overspends. (MHA)
2:11 (Dow Jones) Senior leaders and employees of Hewlett-Packard (HWP), in a
survey, support the company's proposed merger with Compaq Computer (CPQ). Board
member Walter Hewlett has cited employee opposition to the merger as a factor
in his own opposition to H-P's merger with Compaq. He has also said that
management's financial analysis of the merger is overoptimistic. At a meeting
in Cupertino, Calif., H-P CEO Carly Fiorina told 220 "senior leaders" of her
company that when the opposition provides "misleading or inaccurate facts"
regarding the merger, the company will correct them. H-P VP Susan Bowick told
the group that about 62% of the company's employees support the deal, based on
a December 2001 internal survey. (BS)
1:57 (Dow Jones) Goldman Sachs analyst Marc Cohen recommends investors swap
their ownership of bottler Coca-Cola Enterprises (CCE) for Pepsi Bottling Group
(PBG), even following CCE's 10% drop yesterday. PBG beat Cohen's 4Q earnings
and EBITDA estimates and continues to display what he calls an "attractive"
valuation. "Unlike CCE, this company has moved its returns up to levels that
exceed its cost of capital and free cash flow is being used to repurchase
stock," notes Cohen. "The only reason for not becoming even more constructive
about PBG is that CCE's poor performance continues to poison investor attitudes
towards bottling stocks." (CEG)
1:47 (Dow Jones) It's likely not a knockout, but Georgia-Pacific (GP)
officials landed a pretty good right to asbestos rumors swirling about the
company. In 4Q conference call, Georgia-Pacific forcefully called rumors about
the company's financial position "ridiculous" and overblown. The company also
said its covered for asbestos costs. The company's combativeness has scored
with investors, who have bid up the stock in heavy trading. (CCW)
1:37 (Dow Jones) FDA approval of Atrix Laboratories' (ATRX) Eligard, which
treats advanced prostate cancer,was a positive surprise, RBC Capital says,
because its was two months ahead of schedule. The firm raises its Atrix rating
to outperform and increases its price target to $33 from $26. ATRX shares are
adding $2.56 to $23.85 on four times normal daily volume. (GS)
1:22 (Dow Jones) Kmart's (KM) secured creditors were cheered by news that
Fleming (FLM) has resumed shipments, with the secured bonds up about 3-4 points
to 61 bid, 63 offered. But Kmart's unsecured debt is still off about 1/2 point
around 47. Food supplier Fleming's bonds are marginally higher, with the 10
1/8% notes of '08 up 1/2 pt at 98 1/2 bid, 99 offered. Kmart shares up 6c at
96c. (RTB)
1:11 (Dow Jones) Raytheon (RTN) is back in growth mode after years of asset
sales aimed at trimming debt. Chairman and chief executive, Dan Burnham, told
analysts that the company "will put more emphasis this year on growth" and
"will be taking a look at acquisition candidates." Any deals will be smallish
and financed in a way that won't hurt its improving balance sheet. The company
plans to slash its net debt to $6.1 billion by year-end, down from $7 billion
at the end of 2001. (SON)
1:03 (Dow Jones) Equities are priced for stellar profit growth, Anderson &
Strudwick strategist Kent Engelke says, something that probably will not occur
in an anemic rebound with no pricing flexibility. According to Engelke, the
Nasdaq is trading around 200x trailing and 80x anticipated profits, and the S&P
is at 45x current and 25x expected earnings, versus an average of 15x. (GS)
12:49 (Dow Jones) Optical component and chipmaker Agere (AGRA) looks cheap,
Soundview Technology analyst Kevin Slocum says Thursday following the company's
fiscal 1Q results. "This was a good quarter by all accounts, only dimmed by the
company not projecting a return to growth next quarter," he says. "Agere looks
cheap at this $5 level, despite the slow turn in the telecommunications market,
potential delays in Lucent (LU) spinning shares and pending debt transactions."
(JDB)
(END) DOW JONES NEWS 01-24-02
04:02 PM |
