MARKET TALK: Rational's March Qtr May Be OK, But June?
15 Mar 12:21
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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12:21 (Dow Jones) JP Morgan trims FY03 revenue and earnings estimates for
Rational Software (RATL) to reflect "continued weakness in key technical
segments." Analyst Chris Galvin says his March quarter estimates ($180M in
revenue and EPS of 9c) seem appropriate, but he's concerned about the June
quarter consensus. Rational shares down 11.5% to $16.93. (MLP)
12:13 (Dow Jones) Sanders Morris Harris analyst David Miller cut his 2Q
earnings estimate on Walt Disney (DIS) to 9c a share from 14c, citing continued
weakness in the core media networks' operation. In addition to ABC having to
offer make-good time to advertisers because of low ratings, the Arts &
Entertainment cable channel has also seen a ratings decline this year, the
analyst said. (DDO)
11:58 (Dow Jones) It's possible Toys R Us (TOY) was headed to junk before
announcing plans to sell equity and equity-linked securities, says Gimme
Credit. Moody's cut to one notch above junk Thursday, while S&P said triple-B
was likely even if equity deal came off (it's triple-B-plus now). Without the
equity, Gimme Credit thinks the barrier junk would have been broken. (CSE)
11:49 (Dow Jones) Bear Stearns analyst Bob Lam expects strong growth for
companies making technologies for managing increasingly complex computer
networks, despite a sluggish macroeconomy and telecom recovery. He put industry
growth at 20% to $21 billion over the next four years, but predicted four
companies will outpace the average as they solidify leadership positions: NetIQ
(NTIQ), Micromuse (MUSE), Mercury Interactive (MERQ), and Concord
Communications (CCRD). He called all four good long-term investments, but rates
the first two buy and the second two attractive. "These young companies have
the right technologies, partnerships, healthy balance sheets (including strong
cash flow), and management teams to address changing customer demands and to
overcome the current challenges," Lam said. (RR)
11:38 (Dow Jones) More layoffs in the investment-banking industry. SoundView
Technology Group (SNDV), a technology boutique, has laid off 19% of its staff.
But the firm, which has been hurt by the market and economic slump, is also
seeking to expand: Come April, SoundView will open a new office in Boston, to
be run by John Cronin, formerly with FleetBoston Financial Corp.'s (FBF)
Robertson Stephens unit. SoundView shares are up 2.2%. (GFC)
11:34 (Dow Jones) Delta (DAL) remains Deutsche Banc Alex. Brown's top airline
pick this year. Firm cites strategic and financial position to weather the
sharp falloff in demand due to weak economy and terrorist attacks. Also likes
airline's use of regional jets. Keeps strong buy and 12-18 month target of $61.
DAL up 2% at $36. (TG)
11:23 (Dow Jones) Currency markets usually waffle on Friday's in NY and this
one is par for the course, with EUR choppy around $0.8820 and USD/JPY on either
side of Y129. EUR is $0.8823; USD/JPY is Y129.03 (JRH)
11:17 (Dow Jones) The move to begin trading single-stock futures trudges
along: OneChicago LLC, the joint venture formed by the CBOE, the Chicago
Mercantile Exchange, and the Chicago Board of Trade this week approved an
initial list of 24 lead market makers that will help provide liquidity when
trading of this new investment class kicks off. Many recognizable names on this
list, including option specialists like Susquehanna, Timber Hill, Wagner Stott
Bear, Wolverine Trading, Equitec, Botta, and Goldman Sachs' SLK-Hull
Derivatives, as well as Wall Street financial firms like Deutsche Bank and TD
Securities. (KT)
11:10 (Dow Jones) Call it a delayed reaction to some robust economic data. Or
maybe a resumption of the run that has cooled in recent sessions. Or just a
fluke. But stocks are starting toact very well Friday, led by a pretty broad
group of sectors. DJIA adds 61 to 10579, Nasdaq Comp higher by 11 to 1866, and
S&P 500 up 11 to 1164. Among the major groups, semis, banks, and airlines look
good, while home construction, forest products, and building materials are at
the bottom of the pack. In fact, that may be the trend as rates continue
higher. (TG)
11:02 (Dow Jones) Asbury Auto's (ABG) IPO, which managed just a 30-cent gain
Thursday, is having a worse day today. The shares have broken issue, trading at
$16, or 50 cents below their offering price. Usually, companies that break
their offer price never make it back, but there has been one big exception this
year. PayPal (PYPL) broke its $13 offer price a week after its IPO last month,
but it has since rebounded, now up 44% from the offering price. (RJH)
10:54 (Dow Jones) Don't get your hopes up for data network equipment makers,
says JP Morgan analyst Michael Funsch. He cut profit and sales estimates for
three networking firms Friday, saying 1Q appears weak. They are Extreme
Networks (EXTR), Enterasys Networks (ETS) and Foundry Networks (FDRY). "Our
preliminary channel checks suggest that, contrary to consensus views, the March
2002 quarter appears weak and may not represent the point of a return to
sequential growth that most investors were expecting," Funsch writes. (PDL)
10:46 (Dow Jones) Weak spending by telecom service providers led UBS Warburg
analyst Nikos Theodosopoulos to trim his estimates on Nortel (NT), Tellabs
(TLAB), Sonus (SONS), and Juniper (JNPR). "Further weakness in the U.S.
wireline market is putting pressure on capital spending," he says. A spending
pickup may come in the second half of the year, Theodosopoulos said, but could
be tempered by wireless consolidation. (JDB)
10:31 (Dow Jones) The Economic Cycle Research Institute's weekly leading
index rose by 0.2% in the week ended March 8 and the index was 2.9% above its
52-week moving average, a larger gain than in the prior three weeks. (JM)
10:20 (Dow Jones) As the economy continues to stabilize and strengthen, value
stocks like autos and auto parts will become less attractive. Prudential says
market share slippage means overcapacity will continue, and incentives will
stay high. Rising interest rates by mid-year will likely depress auto industry
valuations, though Pru says the risk to its thesis is if production remains
strong and rates don't climb near mid-year. (TG)
10:11 (Dow Jones) The State Teachers Retirement Systems of Ohio said it will
vote in favor of the merger of Hewlett-Packard (HWP) and Compaq (CPQ) in part
because it has confidence that Compaq CEO Michael Capellas will bring the two
companies together, said spokeswoman Laura Ecklar. The pension fund also likes
the merger because it believes the combined company can achieve its cost
savings and revenue projections. While Ecklar said there is some concern about
competing in the low-margin consumer PC market, that will be offset by steady
sources of cash that will enable the new company to keep its lead in imaging
and printing. The retirement fund owns 4.3 million shares of Compaq and 3.5
million shares of H-P. (DLF)
(END) DOW JONES NEWS 03-15-02
12:21 PM |
