MARKET TALK: Tyco's Getting Good At Hand Holding
05 Mar 16:26
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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4:26 (Dow Jones) The negative news reports of its accounting keep rolling on
and Tyco (TYC) keeps taking them on in its weekly conference calls. In the
fourth installment earlier Tuesday, Tyco again defended its accounting
practices and said it's on track with its breakup plan. Tyco is doing a good
job of "hand-holding" investors, said Phua Young of Merrill Lynch, who said the
call was pretty uneventful. (CCW)
4:02 (Dow Jones) Blue chips took some time to gather themselves, while techs
generally managed strength. Stellar economic data - this time from services
sector - provided a brief lift, but stocks look a little tired. Intel gives
semis and tech area overall a lift, while big retailers slip. ISS decision,
coming right up, for some reason being treated as if its a Fed rate
announcement. DJIA drops 145 to 10442, Nasdaq Comp edges up 7 to 1866, and S&P
500 falls 7 to 1146 (preliminary). (TG)
3:50 (Dow Jones) Can the blue-chip index keep chugging on after its recent
stellar run? At least one option investor is playing it safe in case the answer
to that is "no." In the options of the DJX, which has one-hundredth the value
of the Dow Jones Industrial Average, an investor bought more than 12,500
contracts of the May 104 puts at the CBOE, which gives downside protection if
the DJIA falls below 10400 by mid-May. To help finance the put purchase, the
investor sold twice the number of May 98 puts - likely a bet that the blue-chip
index, even if it falls, won't go below 9800 in that time. At the CBOE, the DJX
May 98 puts rose 25 cents to $1.50 as 25,281 contracts traded. The May 104 puts
rose 40 cents to $3.30 as 12,977 contracts traded. DJIA off 150 at 10436. (KT)
3:38 (Dow Jones) Senate Banking Committee schedules March 12 hearing on
economic outlook. Among those slated to testify are Nobel Laureate Economists
Robert Solow of MIT and Joseph Stiglitz of Columbia. (JCC)
3:25 (Dow Jones) Robertson Stephens thinks it will be very difficult for
Kohl's (KSS) to surpass its 19-25% earnings growth rate in its FY02 earnings
report, coming after the bell, because of the company's investment in its first
noncontiguous market expansion (Southern California). "We believe that Kohl's
premium valuation depends on earnings upside, and thus the trading multiple
will likely be under pressure." The firm maintains its buy rating and $76 price
target because the company "is one of the few growth vehicles left in the
department store industry and posts industry-leading comps." (GS)
3:10 (Dow Jones) "Microsoft should get more credit for the quality and
conservatism of its accounting," says UBS Warburg analyst Don Young.
Specifically, Young praises MSFT's mix shift in volume licensing programs to
enterprise agreements, which "is nearly analogous to a shift from 'purchase' to
'lease' accounting." This transition, he says, enhances the visibility of
MSFT's outlook and the stability of its revenue and earnings stream. "Rather
than revenues being driven by PC shipments - PC software revenues will be
driven more by changes in the installed base of PCs." The firm reiterates its
strong buy and has a $105 price target on the stock. MSFT off 35c at $62.97.
(GS)
2:59 (Dow Jones) Shares of Scientific-Atlanta (SFA) down nearly 8% after
fellow set-top box manufacturer, UK-based Pace Micro Technologies, issued a
profit warning Monday. Pace cut its year-end revenue projection by 30%.
However, the UK company cited its decision to avoid the risk of shipping to
troubled European cable companies like NTL (NLI) and Telewest Communications
(TWSTY), while Scientific-Atlanta's largest customers are more established,
with more liquidity. (CBN)
2:50 (Dow Jones) "We're in for much bigger deficits than the CBO is
predicting," says Dean Baker of the Center for Economic and Policy Research,
who questions CBO's projections for capital gains revenue in a letter to CBO
Director Dan Crippen. Baker suggests CBO is underestimating projected deficit
by as much as $500 billion over next 10 years. (JCC)
2:40 (Dow Jones) No, it's not a typo. Overstock.com, an online retailer
specializing in company overstocks, has filed to raise $36.8 million in an IPO.
Dot-com IPOs have been rare. Strike that - they've been almost nonexistent
since early 2000. There was one Web offering recently, for PayPal (PYPL), but
mostly investors have preferred more old economy IPOs. Overstock, incidentally,
will be a W.R. Hambrecht OpenIPO, where retail investors can bid on the stock
in an online auction. The last OpenIPO was breakfast and lunch company Briazz
(BRZZ), which ended 2001 as the second-worst performing IPO of the year, down
more than 80%. (RJH)
2:36 (Dow Jones) If you think the recent economic data suggest good times
ahead for industrial giants like Dow component United Tech (UTX), A.G. Edwards
says you're late to the party. "We are encouraged by the stronger signs of an
industrial recovery, yet a further increase in price objective, to the upper
half of the historical P/E range applied to the 2003 estimate, would presume a
nearly perfect pace of rebound. It seems more prudent to change the rating to
hold rather than to raise the price objective." UTX shares losing $3.60 to
$73.65. (GS)
2:22 (Dow Jones) Is AT&T (T) preparing to buy out AT&T Canada's (ATTC)
shareholders before the June 2003 deadline. It certainly looks that way. BMO
Nesbitt analyst Peter Rhamey says AT&T management indicated Monday they have an
incentive to take such action. By completing the transaction early, AT&T would
reduce the final price it pays. AT&T also would be able to use its stock to
finance the deal if done ahead of completing its transaction with Comcast
(CMCSA), Rhamey said. In possible support of this view, the AT&T/Comcast
agreement allows AT&T to issue up to 275 million shares in connection with
certain, unspecified transactions, which some observers believe include buying
out AT&T Canada's shareholders sooner rather than later. (BED)
2:06 (Dow Jones) The equity index with the fewest problems of overhead
resistance is the S&P Small Cap Index, mostly because it hit an all-time high
on Monday. Hilliard Lyons technician Dick Dickson points out that small-cap
names typically enjoy cyclical periods of about 4-6 years when they
consistently outperform their larger peers. "The current cycle appears to date
from early 2000, which should mean small caps outperform for another 2 years at
least," he says. (TG)
1:55 (Dow Jones) London and Tokyo continue to top the list as the two most
expensive cities in the world for renting Class A office space, although costs
have ticked down slightly from last year, according to a new Grubb & Ellis
study. The report, which surveyed some 60 cities worldwide, shows rental costs
slipped 1.7% in London to $149.04 a square foot in the 4Q from the same period
a year earlier. In Tokyo, costs fell 4.3% to $107.20 a foot. Only one American
city - New York - made the top 10. Its rental costs averaged $59.16 a foot,
down 8.3% from a year ago. San Jose - ranked third a year ago - tumbled to 12th
place with rental costs of $45.31 a foot, and San Francisco - previously fourth
- wound up 16th this time around with costs of $37.71 a foot. (JKM)
(END) DOW JONES NEWS 03-05-02
04:26 PM |
