Plenty of problems with companies still...
09:38 ET PRU Prudential downgraded at Merrill Lynch (32.95 -0.41)
Merrill Lynch downgrades to Near-Term NEUTRAL from Buy in a pre-open note, saying it will be difficult for the shares to trade at much better than book value until there is material improvement in the performance of Pru Securities and substantial unlocking of excess capital; sees earnings risk due the decline in the stock mkt and believes that mgmt will not have access to as much capital as some may believe.
09:35 ET ISM Index seen at 55.5%
The June ISM index will be released at 10 ET; the market expects a very small decline to 55.5% from 55.7% in May - this would still be a strong reading and consistent with a manufacturing recovery. May Construction Spending will also be reported, a 0.2% gain is expected, matching the April increase.
09:34 ET AMR AMR Corp drops base commission outside U.S. (16.60 -0.26)
Effective Oct 1, co will no longer pay a base commission for tickets issued by travel agents located outside of the United States for flights on itineraries originating within the territory of the U.S. and Canada. This is an expansion of the policy change American implemented March 18, when it announced it would no longer pay a base commission to travel agents within the U.S.
09:29 ET TSA Sports Authority files for $90 mln stock offering (11.36)
09:27 ET SG Cowen downgrades Plexus, RadiSys
SG Cowen downgrades PLXS and RSYS to NEUTRAL from Buy, citing increased competitive pressure and added rev risk for PLXS and exposure to the communications mkt for RSYS. Firm also cuts ests for embedded systems peers MRCY and SBSE.
09:25 ET TLGD Tollgrade reaffirms Q2 EPS guidance; revs light (14.67)
Reaffirms Q2 outlook of $0.06-$0.10. A Multex survey of three analysts produces three estimates of $0.10. "Capital spending among telecoms remains tight, but we expect that Tollgrade will earn at least $.06 per share for the second quarter of this year and that revenue will be approximately $14.5 million" (Multex rev consensus $17.45 mln).
09:25 ET ECL Ecolab President resigns (46.23)
Announces the resignation of Richard L. Marcantonio, the company's President of Industrial and Services Sectors. Mr. Marcantonio resigned to become the COO of G&K Services Inc.
09:21 ET BLS BellSouth to repurchase up to $2 bln of stock over next 18 months (31.50)
09:19 ET IGEN IGEN Intl: Dept of Defense expands use of products (31.50)
Announces that the U.S. Army Soldier Systems Center in Natick, Massachusetts has begun purchasing IGEN's Pathigen tests and instrumentation to protect U.S. military troops from foodborne illnesses. In March 2002, IGEN signed an agreement to sell Origen test kits to the U.S. Army Space and Missile Defense Command.
09:18 ET CPWR Compuware: IBM products pose material threat-- Morgan Stanley (6.07)
Morgan Stanley believes that alternative product offerings from IBM pose a material competitive threat to CPWR; also, firm believes that a number of previously-undisclosed items in CPWR's 2002 10-K merit investors' attention; cuts FY03-04 ests and cuts intrinsic-value est to $4.08 from $6.56.
09:17 ET Gapping Up/Down
ENMD +7% (reports preclinical data), CMVT +3% (Merrill upgrade), MCDT +3% (EMC news)... Gapping Down: ALKS -50% (partner receives FDA non-approvable letter); TRPS (-37%), NETE (-30%), CATT (-28%) are weaker after lowering guidance.
09:12 ET S&P futures vs fair value: +0.2. Nasdaq futures vs fair value: -2.0.
The pre-market tone has weakened but is off the worst level of the morning with trade on the lighter side. Negative news in semi (downgrades/est. cuts), drug (JNJ-- non-approval letter from FDA; PFE-- negative LA Times story). Also, Merrill Lynch has cut its 12 month price target for the S&P 500. The Nasdaq PMI is down 4.81 points.
09:12 ET QLGC QLogic: positive comments by Thomas Weisel (38.10)
Thomas Weisel says that QLGC offers the most potential for upside relative to June ests; channel checks suggest SAN implementations are up sequentially, and solid SCSI biz, increasing traction in midrange, and apparent increase in Dell/CLARiiON biz are all good signs for the qtr; believes QLGC could report closer to the top end of 3-8% guidance range. Also, firm says ELX checks suggest at least an in-line qtr.
09:11 ET APTI Advanced Power raises guidance (14.49)
Co expects Q2 revenues to come in at approx. $9.8 mln, above the upper end of the $8.8 to $9.3 mln range previously given (Multex consensus $9.23 mln).
09:09 ET MCDT McDATA solution offered by EMC (8.90)
Announces that EMC is offering McDATA's full family of core-to-edge 2Gb/s storage networking solutions.
09:03 ET TWTR Tweeter may have seen slower sales last month-- Thomas Weisel (16.34)
Thomas Weisel says checks indicate that sales seem to have slowed in the last month and that the co is continuing to suffer from swings in consumer traffic brought on by a weak economy; firm also believes that other high-end consumer electronic retailers are feeling some of the same effects.
08:57 ET VRSN VeriSign: rumors of more layoffs (7.19)
Website f#@edcompany.com is reporting rumors that Verisign will lay off another 30% of staff today.
08:55 ET MIR Mirant plans to issue $370 mln in convertible debt securities ()
The offering is expected to be priced shortly.
08:51 ET AGR.A Agere Systems upgraded at Soundview (1.40)
Soundview upgrades to OUTPERFORM from Neutral due to the following factors: selling pressure is abating from the spin-off and convertible notes, valuation looks attractive, and firm likes the strategic value of recent moves; stock is far less likely to trade at a discount to peers now that the debt and share ownership issues are resolved. Price target is $3.
08:46 ET PCS Sprint PCS may face delay in 1xRTT launch-- Bernstein (4.47)
Bernstein says that the launch of 1xRTT data services is unlikely before mid-August; chance of a delay has increased, as customer care reps do not appear ready for the product launch. Maintains Outperform rating.
08:43 ET S&P futures vs fair value: +1.7. Nasdaq futures vs fair value: +3.0.
The pre-market bias is still favorable but it has weakened. Semi industry could be volatile today in the wake of several downgrades/price target cuts (U.S. and Europe). This has been offset to some extent by the positive take from the Street on May industry data. Nasdaq 100 PMI is off 2.14 points.
08:42 ET MCAF McAfee.com receives another bid from Network Assoc (14.64)
Parent company Network Associates (NET) announced that it plans to commence an exchange offer for all outstanding publicly held shares of McAfee.com Class A common stock. MCAF holders will be offered 0.78 of a share of NET common stock. The previous exchange offer was withdrawn in April after NET decision to restate certain prior period financial statements.
08:38 ET SFNT SafeNet licenses software to Microsoft (13.88)
Announces that Microsoft has licensed a new version of SafeNet's SoftRemote VPN software.
08:33 ET CATT Catapult warns for Q3 and Q4 (21.87)
Revises its Q3 outlook to $0.10 per share on revenues of approx. $8 mln vs prior guidance of $0.20 and $11 mln (Multex consensus $0.21 and $11.31 mln). CATT cites weaker sales in N. America and Japan. CATT says the early indications of improvement in N. America seen during Q2 were premature. At this pt, sees Q4 results in line with Q3 levels (Q4 consensus $0.25 and $12.32 mln).
08:30 ET IDPH IDEC Pharm falls 4% on Zevalinin launch delay (35.45)
Schering AG announces that the launch of its radioimmunotherapy Zevalinin in the EU will be delayed due to certain technical compliance issues at the fill/finish provider. Schering has exclusive worldwide marketing and distribution rights to Zevalin, excluding the U.S., where IDEC Pharmaceuticals retains its rights
08:28 ET PFE Pfizer: former Warner-Lambert execs obscured Rezulin risks-- LA Times (35.50)
The LA Times reports that internal documents show that Warner-Lambert execs who promoted the diabetes drug Rezulin masked early indications of the drug's danger to the liver from federal regulators and later delayed sharing information about its lethal toxicity with family doctors; PFE in a March 28 filing said it is cooperating with the federal grand jury and FDA on the Rezulin investigations. (PFE acquired Warner-Lambert in mid-2000, and Rezulin was withdrawn from the U.S. market in March 2000.)
08:28 ET DIGE Digene Corp terminates merger with Cytyc (11.76)
Delivers formal notice to Cytyc Corp (CYTC) of its termination of their merger agreement. The decision follows news last week that the FTC would seek to block the deal.
08:20 ET NETE Netegrity warns for Q2 (6.16)
Due to constrained IT spending, company expects to post a Q2 pro forma loss of $0.24-$0.30 (Multex consensus -$0.06). NETE puts revenues at approx $14.5-$16.5 mln (consensus $21.87 mln).
08:18 ET EDS EDS attacked by shorts in NY Times article (37.15) -- Update --
The New York Times reports that some short-sellers believe EDS' problems run deeper than its WorldCom exposure, pointing to red flags in its most recent quarterly report to the SEC. "EDS is a perfect example of why Ebitda is a joke," states Rocker Partners general partner M. W. Montgomery. "If ever there was an example of Ebitda not being free cash flow, it's EDS."
08:18 ET CSFB cuts European semis
CSFB out of Europe cuts FY02-03 ests and price targets for European semi stocks STM, IFX, Epcos, ASML, ARMHY, and Philips; firm says they see increased evidence of slowing momentum going into the summer and the end mkt outlook for FY03 is not consistent with the 20%+ growth in semis embedded in current expectations.
08:13 ET EDS EDS outlines WorldCom relationship (37.15)
Believes that although in certain downside scenarios recent WorldCom developments could be material to its results of operations in 2002, in most events they are not, and in any event they are not material to EDS' financial position. Under existing information technology services agreements, WorldCom is expected to contribute $160-$175 mln of EDS' revenues and 3-4 cents of earnings per share in each of the last two quarters of 2002.
08:10 ET ALKS falls 39% on non-approvable letter
08:08 ET MSO Martha Stewart: Investigators find no credible record of stop -- Newsweek (11.47)
Newsweek reports that congressional investigators found no credible record of a stop-loss order between Stewart and her broker from Merrill documents they reviewed last week.
08:01 ET MMM 3M Company raises guidance (123.00)
Co expects Q2 earnings to be at least $1.33 per share, higher than previously expected and above the current consensus of $1.25 per share. Results will benefit from improved sales volumes, primarily in the Asia Pacific area, and from continued improvements in overall operating performance.
07:59 ET FCS Fairchild Semi downgraded at Pru (24.30) -- Update --
Prudential downgrades to HOLD from Buy and cuts price target to $25 from $35; firm says stock is fully valued at this point, believes it is less likely that prices will firm up in 2H02, and believes that lead times in the discrete space are no longer expanding, all of which reduces visibility in the co's gross margin growth.
07:57 ET S&P futures vs fair value: +2.6. Nasdaq futures vs fair value: +4.0.
Equity futures bid slightly higher despite downgrades in the Semiconductor Sector (FCS, XLNX, ALTR). Overseas action mixed with notable gains posted by European telecom players FTE and ERICY on takeover rumors.
07:53 ET MWD Morgan Stanley upped to Mkt Outperform from Mkt Perform at Goldman Sachs (43.08)
07:52 ET ALKS Alkermes may fall on J&J's FDA rejection (16.01)
As reported at 7:34, Johnson & Johnson has received a non-approvable letter from the FDA related to its New Drug Application for Risperdal Consta long-acting injection. Risperdal Consta uses Alkermes' Medisorb drug-delivery technology. If approved, Risperdal Consta will be manufactured by Alkermes.
07:48 ET WCOME Worldcom will resume trading at 8ET (0.83)
Trading will remain halted in MCI Group (MCITE 1.68) pending additional information related to the status of the dividend payment.
07:46 ET ERICY LM Ericsson rises on takeover speculation (1.44)
Stock advanced as much as 17% on reports that company could be in play. A fund manager quoted by Bloomberg.com believes Ericsson will be acquired or that the company itself will buy a rival.
07:46 ET SIA data indicates semi industry poised for strong growth-- Bear Stearns
Bear Stearns says their interpretation of the SIA May data is that the semi industry is on fundamentally solid ground; 3-month moving avg unit shipments grew 11% YoY and 3-month moving avg revenue shipments declined by 10% YoY (vs April unit growth of 0% and a 19% rev decline); although sequential growth may be slowing temporarily, firm thinks the industry is poised for another period of very strong growth in the next several quarters; favorites include: CY, FCS, ICST, INTC, LSI, MU, TUNE, TXN, and VSH.
07:37 ET Xilinx, Altera downgraded by JP Morgan
JP Morgan downgrades XLNX and ALTR to MKT PERFORM from Long-Term Buy based on expectations for weaker growth and rich valuations; channel checks indicate that a moderate amount of excess inventories of XLNX and ALTR products may have accumulated during Q2, and firm also believes that order strength from wireless infrastructure and storage customers is likely to abate meaningfully during the Sept qtr; cuts CY02-03 rev/EPS ests for both co's.
07:34 ET JNJ Johnson & Johnson receives non-approvable letter (52.26)
Receives a non-approvable letter from the FDA related to its New Drug Application for Risperdal Consta long-acting injection. Issued at the 10-month goal FDA has set for responding to standard NDAs, the letter invited further dialogue with the agency to resolve questions regarding certain aspects of the pre-clinical data.
07:32 ET FTE France Telecom may be renationalized -- FT (9.38)
France Telecom (FTE) surges 15% amid Financial Times report that the French government is considering renationalization of the telecom services company. Although the French government today stated that it doesn't believe the current share price reflects the co's true fundamentals, according to Dow Jones, a spokesman for the French Finance Ministry denied the government is considering fully renationalizing the company.
07:29 ET CMVT Comverse Tech upgraded at Merrill (9.26)
Merrill Lynch upgrades to Long-Term BUY from Neutral; firm believes that 1) co will restructure and reach breakeven before year-end 2002, 2) co will preserve cash rather than make a big acquisition, and 3) "Insight" is a clear road map that enables CMVT to leverage its installed base and grow into IP voicemail and other apps.
07:25 ET Merrill Lynch cuts S&P target to 1050 from 1200
Merrill Lynch lowers their 12-month target for the S&P 500 to 1050 from 1200, saying their Sell Side Indicator has begun to fall but still remains well into "sell" territory, and while observers now clearly realize the mkt's issues, a capitulation is nowhere in sight.
07:21 ET RBK Reebok CEO/wife to sell 2 mln shares as part of portfolio diversification (29.50)
CEO Paul Fireman announced that he and his wife have adopted a stock trading plan under which they will sell up to 2 mln shares of Reebok common stock through variable prepaid forward contracts entered into at three pre-determined price levels.
07:18 ET BOBJ Business Objects reaffirms Q2 guidance (28.10)
Co expects Q2 revenue and EPS to be within the range of previous issued guidance of $0.16-$0.17 EPS and $108-$110 mln revs (Multex consensus $0.17 and $109.34 mln). Implements 4% reduction in European workforce to reflect continuing challenging economic conditions.
07:13 ET XMSR XM Satellite reaffirms subscriber goals (7.35)
Co ended the qtr with more than 136,500 total subs, which XMSR says exceeds "most Wall Street projections." XM remains on track to end the year with an anticipated 350,000 subscribers.
07:10 ET IDT IDT Corp makes informal bid for MFS unit (16.92)
The Wall Street Journal reported after the close on Friday that IDT CEO Howard Jonas said he has made an informal $3-$4 bln offer for WCOM's MFS unit; Jonas said he has approached the co's banks about a deal and hopes to meet next week with WCOM CEO John Sidgmore.
07:10 ET TRPS Tripos reduces Q2 and full year outlook (21.80)
Expects to post a Q2 loss of $0.20-$0.25 on revenues of $10.5-$11 (Multex consensus +$0.07 and $13.2 mln). TRPS reduces its full yr rev outlook to $53-$58 mln (consensus $64.77 mln). Co attributes shortfall to delayed purchase decisions among potential customers and the missed delivery of a key milestone in a complex deployment within the SCS biz.
07:01 ET TRW TRW nears pact to be bought by Northrop Grumman for $60-- WSJ (56.98)
The Wall Street Journal reports that NOC may announce a pact as early as this morning to acquire TRW for $7.56 bln, or $60 a share, in a sweatened deal that ends a 4-month standoff (the original offer was for $47); the article states that both boards approved the deal in a Sunday meeting.
06:52 ET DIAN Dianon Systems comments of proposed Medicare revisions (53.42)
Co disappointed by the Dept of Health and Human Services' proposed revisions to Medicare payment policies under the physician fee schedule for calendar year 2003. If the rule is adopted in the form currently proposed, DIAN anticipates a negative impact on 2003 earnings of approx. 10%. DIAN indicated that they are reiterating previously stated guidance for 2002.
06:50 ET V Vivendi Universal: CEO Messier loses support of key French directors (21.50)
The Wall Street Journal reports that Jean-Marie Messier has lost the support of key French directors, who decided to nominate Jean-Rene Fourtou to succeed Messier; if his nomination is agreed to formally by V's board, Fourtou is expected to embark immediately on a restructuring plan to sell off assets and reduce the co's debt, in what would effectively be a breakup of the co.
06:44 ET MGRC McGrath RentCorp terminates Tyco merger (25.92)
Co exercies its right to terminate the merger agreement between McGrath RentCorp and Tyco International. "Because of Tyco's operating and management issues, we no longer believe an acquisition by Tyco is in the best interest of our shareholders."
06:42 ET European Markets
FTSE...4650.10...-5.40...-0.1%. DAX...4418.79...+33.91...+0.8%.
06:42 ET Asian Markets
Nikkei...10595.44...-26.40...-0.3%. Hang Seng...10598.55...-80.46...-0.8%.
Saturday's In Play
19:24 ET HPQ Hewlett-Packard battle with Lexmark discussed in Barron's (15.28)
Barron's Plugged In column focuses on Hewlett's effort to gain market share against Lexmark (LXK) in the low end of the printer market; the article present both sides of the debate regarding the ability of HPQ to win customers for its printers by offering lower priced replacement cartridges.
19:14 ET ACS Affiliated Computer gets positive mention in Techonology Trader column (47.48)
Barron's Technology Trader column is positive on ACS, citing company's strong recurring revenue stream and potential to win a huge Procter & Gamble (PG) contract; one risk noted is that company's government business, which comprises 40% of revenue, will suffer due to growing state and local budget deficits.
19:01 ET LTD Limited gets positive Barron's write-up (21.30)
Despite a doubling of the stock price in recent months, Barron's still pursues a positive angle on the stock, focusing primarily on its strong management team.
18:55 ET UTSI UTStarcom gets positive Barron's mention (20.17)
A Barron's article highlights UTSI, arguing that the company's PAS technology for mobile phone service may have a longer lifespan than many skeptics believe. Though the technology is inferior to cellular, it is also cheaper and might find a growing market in China and other developing nations for several years, according to the article.
18:48 ET Susan Byrne's picks in Barron's
In Barron's, Susan Byrne of Westwood Management offers these picks: BellSouth (BLS 30.60), Apple (AAPL 17.06), IBM (IBM 71.90), Sears (S 54.25), General Motors (GM 51.50).
Friday After the Close
19:26 ET DIS Walt Disney reports math error in 2000/01 earnings (18.90 -0.15)
Earnings restatement - two words that invoke fear in investors; but this time they need not fear as Disney is restating 2000 and 2001 pro forma earnings higher due to a math error which resulted in goodwill amortization at its Internet operations not being excluded, as it should have been under current accounting rules.
16:15 ET TELM Tellium warns for June quarter (0.93 +0.23)
As an illustration of just how bad business is in the telecom equipment sector: TELM warns that Q2 (Jun) revenues will be down to $3 mln from $54.1 mln in the March quarter; the Multex consensus had been $23.0 mln. Company also announces restructuring plans.
16:08 ET HD Home Depot to pursue govt business (36.73 -0.47)
Announces its intention to pursue federal govt business, which marks a change in the co's previous policy, which precluded it from selling to any federal governmental agency or entity. |
