MARKET TALK: Nextel Unit Holds Back On Loan Payments
04 Feb 10:09
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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10:09 (Dow Jones) Nextel Communications' (NXTL) NII Holdings unit failed to
make a $41 million interest payment on its 12.75% senior redeemable notes due
2010. The interest payment on the notes, with $650 million principal amount
outstanding, was due Friday. NII Holdings also said it doesn't plan to make
further principal or interest payments on a $382 million vendor financing loan
with Motorola Credit (MOT) or a $108 million Argentine bank credit line.
Forbearance agreements related to earlier defaults on the loans expired Jan. 22
and haven't been extended, so the lenders can pursue other means to collect the
funds. Shares off 6% at $7.40. (CS)
10:05 (Dow Jones) Chicago Fed's CFNAI showed some improvement in December
relative to November, with the monthly indicator rising to -0.77 from a revised
-1.29 in November. The three-month average was up to -1.05 from -1.44.
Nevertheless, the Chicago Fed said December's reading was continuing evidence
of below-trend growth and that "the U.S. economy was in recession." (MEM)
9:59 (Dow Jones) Typically great thoughts from Lehman's Jeff deGraff. First,
the difference between a downtrend and a trading range is the response to
oversold conditions. In trading range, the lack of trend benefits buying
weakness and selling strength. In a trend, it's pressing bets in direction of
the trend that pays off. The Sept.-January rally did not change the underlying
trend. "Therefore, if we have entered into a trading range, oversold conditions
should find support, " he says. "If such conditions fail to provide demand, the
downtrend should be considered the dominant force." He also adds that the Enron
fallout and the environment it's creating is the breading ground for confidence
degradation. Real bottomsoften result as disdain for stocks emerges, and this
could have that potential. Finally, about a year ago he pointed out that by the
end of most big boom/bust cycles, someone usually goes to jail for the sins of
their greed. "This cycle appears no different." (TG)
9:46 (Dow Jones) Fed funds holding some gains this morning, though
strategists say not much has changed in terms of expectations. Market still
said to be counting on no move at March FOMC. (SPC)
9:44 (Dow Jones) Lehman says markets have responded vigorously to fear of
unknown over past several weeks. General themes such as accounting abuses,
asbestos, and the rating agencies have been compounded by company-specific
concerns. Trend likely to weigh on valuations until 10-Ks, proxies and auditor
reports are filed in March. (MCG)
9:31 (Dow Jones) SG Cowen sees signs Cisco (CSCO) may beat Street views when
it reports on Wednesday. Sees gross margins up from last quarter, and believes
deferred revenue could be up in quarter, indicating backlog is building. Sees
improvement to inventory turns, and thinks Cisco can grow faster than market in
2002. Keeps buy rating. (TG)
9:22 (Dow Jones) Commerzbank says credit concerns will keep Fed on hold until
2003. Credit quality tends to hit bottom long after an economic expansion is
well underway. Market views on monetary policy are likely to converge and soon
will be displaced by the debate about appropriate fiscal initiatives. Despite
belief in a belated and halting recovery, Commerzbank still believes temporary
fiscal stimulus such as extending unemployment benefits is more suitable than
permanent tax cuts. (MCG)
9:18 (Dow Jones) Moody's reaffirmation of Williams Cos. (WMB) credit rating
Friday gave investors something to cheer about, but it turns out this time
Standard & Poor's was the one to watch. S&P placed Williams on creditwatch
negative after the market closed. That's not all. With Williams' former
communications business possibly in credit default,Williams may have to issue
additional equity. Look for Williams shares to give back Friday's gains.
"Credit strength is an especially important key driver of marketing and trading
for Williams and any further slowdown in this business stemming from higher
credit costs would bring current EPS estimates into question," said J.P.
Morgan's Anatol Feygin. (CCC)
9:11 (Dow Jones) News from Hewlett-Packard (HWP has stock futures looking a
little better. Sees 1Q well above views and, in what is sure to go over well,
attributes part of the good news to an uptick in consumer demand. Margins up
nicely. DJIA futures off 37, S&Ps down 3.50, and Nasdaq futures ease 5. (TG)
9:04 (Dow Jones) "Our new war will be costly," says President Bush's new
budget. "Some of those costs will not show up on the government's books.
Terrorism has already inflicted considerable losses on the private economy, and
now entrepreneurs and employers will have to shoulder the expense of
still-tighter security at points of vulnerability. These are real and heavy
burdens for our society." (JCC)
8:59 (Dow Jones) There are plenty of thoughts on Enterasys (ETS) this morning
in wake of possible revenue recognition issues and SEC investigation. Here are
CSFB's: cuts 4Q, 2002, and 2003 estimates, and says if there are serious issues
with the company's Asia business, Enterasys would have to rebuild in a region
that is critical to growth in the networking industry. CSFB also says fears
that other network equipment companies may need to scrub their Asian channel
sales could cause weakness in Extreme (EXTR) and Foundry (FDRY). Cisco (CSCO)
could be a beneficiary of disruption at Enterasys. (TG)
8:46 (Dow Jones) Tyco (TYC) shares are "tremendously undervalued," Merrill
believes, recommending purchase and putting a target price of $80 on the
recently-battered shares. Positive comments from the rating agencies should
help quiet the "inaccurate concerns" about the company's financial health, and
insider share purchases should provide some comfort to investors of
management's view of the stock. With over 900 million shares traded so far this
year (47% of the total outstanding), a shift to value investors from
growth/momentum players may be nearing a climax, which could allow the stock to
stabilize. (TG)
8:38 (Dow Jones) Pru says Micron's (MU) analyst meeting Friday was pretty
bullish, with the environment improving, the industry consolidating, and the
company's competitive position continuing to strengthen. Firm sees Micron as
"ultimate" cycle play, and reiterates buy rating ad $50 target. Shares closed
Friday at $34.85. (TG)
8:30 (Dow Jones) Stocks are going to kick off the week in sloppy fashion.
Enron's (ENRNQ) former chairman's decision to stay quiet isn't going over well,
and if you were bracing yourself for the worst at Enron, it appears you were
right to do so, given some of the details of this weekend's internal report on
the company. (While no laughing matter, the quote of the weekend belongs to
Rep. Billy Tauzin, R-La., who wonders whether "maybe somebody ought to go to
the pokey for this.") Tyco (TYC) is going to tap its banks to buy back some
commercial paper, the cost of which is going to trim 2002 EPS by up to 2c. The
Global Crossing (GBLXQ) situation took another turn with word of an SEC
investigation into that company's accounting practices. Ciena (CIEN) cut by
ABN-Amro. Treasurys moving higher. (TG)
(END) DOW JONES NEWS 02-04-02
10:09 AM |
