MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, MARCH 6, 1998 (1)
Saturday, March 7, 1998
Wall Street shares bounced back despite red flags from Motorola and Intel earlier this week. Bay Street racked up its 10th gain in 11 sessions to end the week 24 points off a record
U.S. stocks rose as Intel Corp. and other beaten-up technology shares attracted buyers and some investors sought safety in telephone shares.
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Meanwhile, other high-tech companies issued warning shots. Motorola Inc. (MOT/NYSE), which warned Thursday first-quarter earnings will fall short of expectations, lost US$2 7/16 to US$53 5/16.
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And personal computer maker Compaq Computer Corp. said Friday after markets closed to expect first-quarter results to fall below Wall Street's expectation after stiff competition in North America forced the company to cut prices.
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Compaq expects first-quarter sales to be about the same as last year and earnings to be break-even. Compaq (CPQ/NYSE) rose 9/16 to US$27 11/16.
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The Dow Jones industrial average rose 125.06, or 1.5%, to 8569.39. On the week it gained 23.67 points, or 0.3%.
The Standard & Poor's 500 composite index rose 20.64, or 2%, to 1055.69, a gain of 6.35 points on the week, or 0.6%.
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The technology heavy Nasdaq composite index, which Thursday had its worst drop in two months, soared 41.57 points, or 2.4%, to 1753.49. It closed down 17.02 points on the week, or 1%.
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About 669.8 million shares traded on the Big Board, up from 652.9 million Thursday. Advancing stocks trounced decliners three to one on the New York Stock Exchange. Only five of the S&P 500's 90 industry groups declined.
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Intel (INTC/nasdaq), which fell 13% Thursday, rose US$2 9/16 to US$781 1/88. Dell Computer Corp. (DELL/NASDAQ) gained US$65 1/88 to US$1381 1/82.
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Telephone shares of companies with no exposure to Asia gained Friday. Bell Atlantic Corp. (BEL/NYSE) rose US$3 1/16 to US$95 5/16. The S&P index of local phone companies gained 1.8%, its biggest rise in more than a month.
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Lucent Technologies Inc. (LU/NYSE) rose US$3 9/16 to US$107 15/16 after it said its share of the global telecommunications-equipment market will increase as it focuses on fast-growing segments such as wireless and data.
Canadian stocks advanced, led by BCE Inc., Northern Telecom Ltd. and metals.
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The Toronto Stock Exchange 300 composite index gained 57.86 points, or 0.8%, to 7185.6 - the 10th gain in 11 sessions. The index closed at its highest since Oct. 8, and 24.33 points short of its record close on Oct. 7. The index gained 93.12 points, or 1.3%, on the week and is up 0.8% on the year to date. A total of 101.7 million shares traded, down from 114.9 million sharesThursday. On the broader TSE, advancers outpaced decliners 617 to 378, with 315 issues unchanged.
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BCE (BCE/TSE) gained $1.15 to $52.40, its 51.7% owned subsidiary Nortel (NTL/TSE) gained $2.45 to $77.20, and Newbridge Networks Corp. (NNC/TSE) gained $1.10 to $33.70.
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Canadian National Railway Co. (CNR/TSE) rose $1.20 to $88.80. Geac Computer Corp. (GAC/TSE), up $1.60 to $60, earlier hit a record of $60.50.
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Metals issues gained on reports of declining London Metal Exchange stockpiles. Cominco Ltd. (CLT/TSE) gained 60› to $25.60 while Inco Ltd. (N/TSE) rose 25› to $27.40. Rio Algom Ltd. (ROM/TSE) rose 5› to $27.10 and Noranda Inc. (NOR/TSE) gained 20› to $28.35. Barrick Gold Corp. (ABX/TSE) rose 45› to $27.65 and Placer Dome Inc. (PDG/TSE) gained 15› to $17.65 to lead gold issues higher after bullion rose US$1.10 to US$295.20 an ounce on the New York Mercantile Exchange's Comex division.
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In other markets, the Montreal Exchange portfolio rose 26.91 points, or 0.7%, to a record 3668.8. For the week, it gained 25.49 points, or 0.7%.
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The Vancouver Stock Exchange composite climbed 4.83 points, or 0.8%, to 630.53. For the week, it rose 1.06 points, or 0.2%.
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For a scorecard of trading activity on all Canadian Stock Exchanges, go to:
quote.yahoo.com .
REFERENCE: Canadian Market Summary
canoe2.canoe.ca
Overseas markets finished the week mixed.
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London: The FT-SE 100 index closed at 5782.9, up 87.3 points, or 1.5%, a rise of 15.6 points, or 0.3%, since last Friday.
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Frankfurt: Germany's blue-chip share Dax index closed at 4715.95, up 92.55 points, or 2%, a rise of 6.12 points on the week.
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Tokyo: The 225-share Nikkei average closed at 17,131.97, up 283.42 points, or 1.7%, up 300.30 points, or 1.8%, on the week.
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Hong Kong: The Hang Seng index closed at 10,919.53, up 115.85 points, or 1.1%, a loss of 561.16 points, or 4.9%, since last Friday.
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Sydney: The all ordinaries index closed at 2667.6, up 14.9 points, or 0.6%, down 29.8 points, or 1.1%, over the week.
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Compaq warns of first quarter below expectations
HOUSTON, March 6 (Reuters) - Compaq Computer Corp. said Friday it expects its first-quarter earnings to be far below what Wall Street was expecting because of weak personal computer demand and plunging prices.
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After the market closed, the world's biggest maker of PCs said its first-quarter sales likely will be about the same as last year's $4.81 billion and that it will only break even.
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It was the third bellwhether technology company in three days -- following Intel Corp. and Motorola Inc. -- to warn of weak first-quarter results.
There now is strong evidence that the worldwide computer industry, one of the engines of economic growth, is facing fundamentally lower demand, analysts said.
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"There is real trouble in the sector," said John Rossi, managing director at investment bank BancAmerica Robertson Stephens. "We're looking at a pretty tepid market this year."
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Demand from Asia has collapsed amid the region's economic troubles, corporate buyers are putting off purchases until Microsoft Corp. releases a new operating system late this year, and corporate technology departments are throwing all their money at fixing their Year 2000 glitches, Rossi said.
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That caught Compaq by surprise, which had dropped prices and pushed lots of PCs to resellers and distributors late in the year. But the resellers are still burning off old inventory and are not buying any more.
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"We found that the North American commercial market was very price competitive," said Earl Mason, Compaq's chief financial officer. Demand is weaker than what most of the industry expected and PC makers are slashing prices to make way for new products.
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Mason said the company does not yet know how long it will face these conditions, but it is moving quickly to increase promotions and cut prices to get sales going again.
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Wall Street had expected Compaq to earn 35 cents a share for the quarter ending March 31, according to a recent survey of analysts by Zacks Investment Research.
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Churchill gets go-ahead - By ALAN TOULIN - Ottawa Bureau Chief The Financial Post
Newfoundland and Quebec reach agreement on $12-billion hydro project in
Labrador.
An agreement in principle for a $12-billion Quebec-Newfoundland hydroelectric project in Labrador will see the creation of a new company, with Newfoundland owning 65% and Quebec 35%, sources say.
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Details of the agreement are to be made public Monday when Premier Brian Tobin and Premier Lucien Bouchard meet in Churchill Falls, Nfld., to sign the deal.
The initial agreement should lead to a final deal projected to be completed by the yearend. It represents a set of guiding principles the two provinces worked out in months of secret negotiations on the controversial project.
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Newfoundland aimed at using the new power developments to try and overcome what it considers a bad contract negotiated by the two provinces in the first Churchill Falls deal, signed in the 1960s.
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But insiders say Bouchard insisted on a clause in the latest agreement saying nothing in the new deal is related to the old Churchill deal.
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The new power projects centre on an addition to the Churchill Falls generating station, a new generation facility on Gull Island and a proposal to examine a site at Muskrat Falls for possible power generation.
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The Gull Island station will generate 2,200 megawatts of power and Newfoundland will be guaranteed 1,000MW for use in Labrador and an additional 800-MW transmission line it plans to build under the sea to Newfoundland.
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Quebec will get 1,200MW of power for its domestic markets and sales to the U.S.
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The estimated cost of this power generation will be 2.7› a kilowatt, which compares with the North American average cost of 6.3› a kilowatt.
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At Churchill Falls, two new generators will be built, which will add a further 1,000MW of power. If the feasibility study says Muskrat Island should be built, another 800MW could be generated.
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Estimates for job creation over the 10-year life of these projects include 17,000 direct jobs and 67,000 indirect jobs.
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Sources caution the project still must accommodate environmental concerns and aboriginal land claims and compensation, a process expected to be lengthy before work actually begins.
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As well, Newfoundland is trying to get Ottawa's help in financing the $2-billion cost of the undersea transmission line. So far, Ottawa has agreed to feasibility studies to examine the project's cost effectiveness as asource of power for Newfoundland.
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The province hopes to be able to use pollution credits for reducing greenhouse gas emissions as a way of financing the $2-billion transmission line.
Newfoundland estimates the switch to hydro power on the island from oil, coal and gas generated power could help Canada meet about 20% of its commitment under international treaties to reduce greenhouse gas emissions.
This reduction could be made available to Ottawa in return for financing help with the transmission line.
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Recently, Suncor Energy Inc. took the first step in the international market for credits by paying Niagara Mohawk Power Corp. of Syracuse, N.Y., $10 million for 100,000 tonnes of greenhouse gas emission reductions. That puts an initial value on the gas credits at $100 a tonne.
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The transmission line to the island is crucial to the whole development. Tobin wants to use the additional power to help develop Labrador and to entice Inco Ltd. to build a smelter-refinery at Argentia to process Voisey's Bay nickel on the island.
The development of the new hydro power coming to the island changes the power costs associated with the refinery and could make it more attractive for Inco Ltd. to go ahead with its Voisey's Bay project.
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The province and the company are deadlocked over the $3.4-billion development. With falling nickel prices, the miner is re-evaluating its investment in the mine and smelter.
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Tobin has taken a hard line, insisting Inco build the smelter-refinery with its estimated 800 jobs or face the consequences of being denied permits to mine the Labrador nickel site.
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