MARKET TALK: At Least Manufacturing Pdtn Was Unchanged
15 Feb 09:51
Edited by George Stahl
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
9:51 (Dow Jones) Industrial production declined by 0.1% in January, marking
the 15th decrease in 16 months. One encouraging sign: manufacturing production
was unchanged last month. These numbers suggest a bottom is being formed and
that a production recovery is imminent. Capacity utilization fell by 0.2
percentage points to 74.2%. (JM)
9:44 (Dow Jones) PayPal (PYPL) is coming to market, but at least one
influential IPO analyst wishes it wouldn't. David Menlow, president of
IPOfinancial.com, loved the deal last week, calling it one of the marquee deals
of the quarter. Since then, though, PayPal has disclosed patent-infringment,
regulatory and SEC problems. So Menlow is urging investors to tread cautiously.
"We can only caution everyone that this offering now looks like a trainwreck
waiting to happen," he says, giving it his "extreme risk" rating. (RJH)
9:40 (Dow Jones) Moody's cut its debt rating on American Tower (AMT)
Thursday, but Deutsche Banc, after an "extensive review," still likes the
wireless-towers group, assigning the sector a market-weight recommendation, but
noting that shares have "tremendous" upside potential. AMT, Crown Castle
International (CCI) and SBA Communications (SBAC) have buy ratings, while
Deutsche Banc has SprectraSite Holdings (SITE) at market perform. JP Morgan
says it's puzzled by Moody's debt cut, given that Moody's cited issues that are
already known. CCI's share-price decline is also puzzling, JP Morgan says,
because of the condition of the company's balance sheet; despite the positives,
investor concerns could throttle the performance of these stocks. (NBB)
9:26 (Dow Jones) Banc of America doesn't know how the patent infringement
suit filed against Brocade (BRCD) by McData (MCDTA) will turn outor even if it
has any merit. The firm just knows that it doesn't like it. "We are concerned
that lawsuits could create a cloud over publicly traded shares of the parties
involved. We would advise clients to avoid being hasty around this and make
aggressive changes in their positions either way." Banc of America adds that
it's concerned the disputes could drag on for months. (GS)
9:17 (Dow Jones) The worst times may have passed in the executive recruiting
industry, says Merrill Lynch, which upgrades Heidrick & Struggles (HSII) to
near-term neutral from reduce. "HSII appears to have enough cash to weather the
storm and is making significant changes to the expense structure to
re-establish profitability without losing people." The firm doesn't change its
near-term reduce rating on Korn/Ferry (KFY), which is "in a more tenuous cash
position and have lost key people." (GS)
9:10 (Dow Jones) Halliburton (HAL), whose stock has taken a beating because
of four recent asbestos verdicts totaling $152M, won a temporary restraining
order from a Pa. Banruptcy Court for 200,000 pending asbestos claims. UBS
Warburg writes, "This event does not solve all of Halliburton's problems, but
it could remove significant risk from the equation." The firm raises the stock
to buy from hold and says the stock could be worth $30 a share if the TRO is
upheld. HAL closed Thursday at $14.66. (GS)
8:58 (Dow Jones) Lehman downgrades StanCorp Financial (SFG) to market perform
from strong buy on valuation. "We do not believe investors should pay a premium
for a company that we project will perform in-line with its peers. In the past
StanCorp underpromised and then pleasantly surprised investors by
over-delivering. We do not think that this pattern will continue into 2002."
The small-cap group insurance company closed Thursday at $53.90. (GS)
8:50 (Dow Jones) The January PPI report contained the annual revisions to
seasonal adjustment factors and to the seasonally adjusted changes. As a result
there are small changes to individual months in 2001, but no net changes to the
inflation rate for the year. For instance, December was revised to -0.6% from
-0.7%, but February was revised to +0.2% from +0.1%. (JM)
8:46 (Dow Jones) Nvidia (NVDA), one of the best performing stocks in the S&P
500 last year, reported much-better-than-expected 4Q results, raised its
guidance for the current fiscal year and, oh yeah, unveiled an SEC
investigation into its accounting. Morgan Stanley analyst Mark Edelstone, who
keeps his strong buy on the stock, calls the accounting issues "relatively
benign" and raises his estimates above company guidance. Nvidia shares were
lower overseas. (GS)
8:40 (Dow Jones) Qwest Communication's fourth cut to its 2002 capital
spending plans since Septemeber may put more pressure on telecom equipment
concerns. The company cut spending plans to $3.7 billion from $4 billion.
Morgan Stanley analyst Alkesh Shah says Avici (AVCI) Ciena (CIEN), Juniper
(JNPR), Nortel (NT), ONI Systems (ONIS), Redback (RBAK), Riverstone (RSTN),
Sonus (SONS) and Tellium (TELM) have "medium to high exposure to Qwest's
capital budget, in our view." (JDB)
8:36 (Dow Jones) The modestly better-than-expected wholesale inflation news
means nothing, so far, for Treasurys. The twos are flat at 4.25%, while the
10-year price is up 5/32, to yield 4.93%. Traders may be holding out for the
industrial production and consumer sentiment before moving. (MSD)
8:34 (Dow Jones) The PPI rose by 0.1% in January because of a similar-sized
0.1% increase in energy prices. Core prices decreased by 0.1%. This was a very
benign report showing a general absence of inflation pressures, which will mean
that as increasing signs of economic recovery surface they are likely to be
welcome by all markets because, in this context, growth is more likely to spur
productivity than price inflation. (JM)
8:29 (Dow Jones) Investors donned their Dow 10000 hats Thursday, but fresh
accounting concernsare likely to knock them off quickly Friday. Nvidia (NVDA)
reported an SEC accounting probe, along with its better-than-expected 4Q
results and improved outlook. Meanwhile, The New York Times is raising
questions about IBM (IBM) recording the gain from a unit sale as operating
expenses. Elsewhere, Paypal (PYPL) finally goes public, having priced last
night ($13/shr) in the middle of its estimates. And it's a heavy day for
economic numbers: January PPI (8:30 a.m.), Jan. industrial production (9:15), U
of Mich. sentiment (9:45) and housing market index (1 p.m.). Treasurys flat,
dollar firmer ahead of data. Nikkei, Europe lower. (GS)
(END) DOW JONES NEWS 02-15-02
09:51 AM |
