DJ MARKET TALK: Problems For Tech Companies? What Problems?
Edited by Thomas Granahan Of DOW JONES NEWSWIRES (Call Us: 201-938-5299; All Times Eastern)
3:05 (Dow Jones) Technology investors seem to be brushing off any negative news and focusing on Cisco's (CSCO) "positive" earnings report, aiding stocks such as Sun
Microsystems (SUNW) and International Business Machines (IBM) in recouping some of their losses. After trading at multi-year lows earlier this week shares of IBM were
recently up 7%, to $81, while Sun was up 10%, to $6.76. Unfortunately for Xerox (XRX) and Gateway (GTW), Cisco's earnings couldn't help as much - Xerox was only up
1.5%, while Gateway traded 2% higher. Many of their peers are in double-digit-gains territory. (DLF)
2:52 (Dow Jones) Any thoughts on the last time the Nasdaq Comp closed with a gain of 100 points or better? You have to go back to July 12 of last year, when the Comp
rallied 109, or 5.3%, to 2084. The current 107-point jump, a 6.9% improvement, still doesn't crack the top 10 on either a price or percentage basis, but the latter is getting
close. The 10th-largest percentage increase came on July 18, 2000, when the index gained 7.2%. (TG)
2:35 (Dow Jones) The key question for many analysts and technical strategists is whether USD's relief represents a short-term rebound, prompted by the extreme
positioning in the market, or a turn in the tide of bearish sentiment towards the currency. For now, most seem to think it's the former. "I think it's more of a short-term
correction," said John McCarthy, director of forex at ING Barings Capital Markets in New York. "It will require more than the rebound in the equity market based on a
surprise in one set of earnings. You're going to have to see a series of those." (GMM)
2:20 (Dow Jones) Healthcare REIT (HCN) is in the market with a 3 million share follow-on expected after the close, according to MorningNotes.com. Deutsche Bank, UBS,
Legg Mason and Raymond James are leading the deal. (RJH)
2:09 (Dow Jones) Talk is that a $470M 8-year bond offering from Trump Hotels & Casino Resorts (DJT) is proving a hard sell after Donald Trump last year threatened to
withhold payments on the company's approximately $1.8 billion in publicly traded debt until bondholders gave him better terms, traders say. Deal still expected by the end
of the week. No official price talk, but some say Trump will have to offer 11% to 12%. (NAB)
1:54 (Dow Jones) BFMA Holding, an activist investor that once tried to buy Morton's Restaurant Group (MRG) and still holds a 13.7% stake, said it is "just as surprised as
anybody else" that Carl Icahn reported a stake in the company. Icahn Associates had provided a financing commitment to BFMA when it offered to acquire Morton's for
$28.25 a share in May 2001. BFMA withdrew the buyout offer when it was unable to reach an agreement with the company. On March 28, Morton's agreed to be acquired for
$12.60 a share in cash by an affiliate of Castle Harlan Inc., founded by a member of Morton's board. "I think at some point we'll open a dialogue (with Icahn), but at this
point, I don't see a reason until we see what we're going to do and until we see what he's going to do," a BFMA representative said. "It's comforting to know that there are
other sophisticated investors that feel the way we feel that this management team has rigged the process and is trying to steal this company." (BS)
1:40 (Dow Jones) A midday options update: volatility easing notably in the broad market and particularly in the tech sector. The CBOE's market volatility index, or VIX, is
off 1.46, or 6%, to 23.11; the Amex's Nasdaq Volatility index, or QQV, is off 4.33, or 9.7%, to 40.35. Across Wall Street's trading desks, investors looking for ideas and
ways to capitalize on relatively cheap stock prices and rich options premiums by selling options to offset the cost of buying stock. A fair bit of call buying too as traders
caught holding short positions scramble to cover. (KT)
1:26 (Dow Jones) TMP Worldwide (TMPW) looks to have a monster of a second half, and that's the problem, says Banc of America analyst Marta Nichols. TMP drastically
cut 2002 guidance to 90 cents from as much as $1.40. Nichols has adjusted her views accordingly but says she still thinks they're too high since the required revenue
ramp up "looks particularly challenging." (RJH)
1:17 (Dow Jones) While the turnaround at Lucent Technologies (LU) is solidly on track, according to Raymond James analyst Chris Fischer, it may be long in coming.
"With the industry continuing to face a strong headwind, the turnaround will likely take longer than our initial thoughts when we upgraded the stock in early February,"
Fischer said after meeting with Lucent's Chief Financial Officer Frank D'Amelio Tuesday. He rates the stock a strong buy. (JDB)
1:08 (Dow Jones) As if further proof were needed that U.S. litigation has gotten out of hand, on cue comes a lawsuit by a nonprofit California group claiming that chocolate
makers have dangerous levels of lead and cadmium in their precious product. Named in the L.A. suit (yes, it's California) are Mars, Hershey Foods (HSY), Switzerland's
Nestle (Z.NES), Kraft (KFT), Rocky Mountain Chocolate Factory (RMCF) and See's Candies. The suit wants warning labels on chocolate, among other things. Nestle has
already come out swinging, saying it will defend itself "vigorously." If the historically neutral Swiss decide to go to war on this one, they can probably expect the support of
at least half the world's population. (GC)
1:00 (Dow Jones) NTL (NTLD) listed assets of $16.8 billion and debts of $23.38 billion in its Chapter 11 petition, filed in the U.S. Bankruptcy Court in Manhattan.
Wednesday's filing by the cable company, whose prearranged Chapter 11 plan provides for $10.6 billion in debt to be converted into the equity of two reorganized
companies, is the eighth largest Chapter 11 case filed since 1980. The filing is also among the largest ever filed by a telecommunications company, just below Global
Crossing's (GBLXE), which filed for Chapter 11 in January with $25.51 billion in assets. (DE)
12:40 (Dow Jones) Nymex crude stands more than $1 a barrel higher at midday, propelled by a combination of technicals, bullish inventory data, and renewed violence in
the Middle East. June's surge past $27.55 resistance gives contract "the power to reach for $28.45 high from April 4," says Tim Evans, IFR Pegasus analyst. "Progress
beyond that level could draw fund buying, helping the market grind toward spot highs at $29.98, $30.70, and $31.87/bbl." June crude +$1.02 to $27.65; psychological
resistance at $28.(MSX/MXF)
12:29 (Dow Jones) The big Maryland tornado on April 28 will cost property insurers about $100 million, with the bulk being paid by State Farm, Allstate (ALL), and
Nationwide (NFS), A.M. Best says. (RJH)
12:13 (Dow Jones) The AMEX Biotechnology Index is up 7% Wednesday, but analysts don't see any news behind the rise. Instead, they say this might represent a
recovery rally from recent weakness, with bargain hunting a factor. "You have to take a longer-term view of this sector or you'll get gray hair fast," says Banc of America
Securities analyst James Reddoch. "One of the stocks I follow was down more than 20% yesterday and is up 18% so far today. Yesterday they hated it; today they love
it." Same could be said for the sector. (DMR)
11:59 (Dow Jones) Charter Communications (CHTR) provided first-time capex guidance of $1.7B in 2003 and $1.5B in 2004 at Tuesday's NCTA cable show. It also
reaffirmed its '02 capex budget of $2.5B. UBS analyst Aryeh Bourkoff says that while the future forecasts are higher than his expectations, Charter's cash-flow
projections are also higher. While Bourkoff's "comfortable" with the numbers, there could be volatility in the company's bonds, he says. The 8 5/8% notes of '09 are back
up at 88 1/2 bid, 89 1/2 offered after trading as low as 86 3/4 Tuesday. Shares up 7.5% at $8.70. (RTB)
11:49 (Dow Jones) April 16, DJIA gains 200+ points; March 1, DJIA gains 250+ points, followed by another 200+ point gain in the very next session. So what? Just a
reminder that bear-market rallies can make you feel good, suck you in, and then send you reeling. And Hilliard Lyons technician Dick Dickson notes the overhead supply in
tech names. With many of these stocks recently testing, or dipping below, September lows, plenty of buyers over the past few months are looking at losses and could be
highly motivated to "get out even" on any rallies, limiting upside. But who knows - maybe this time is different. (TG)
11:32 (Dow Jones) The corporate bond market is trading better today, led by brokerage and telecom bonds. Both sectors are trading between 15 and 20 basis points |
