Ironic press about the market is increasing...from Fortune
Street Life
Wednesday, April 15, 1998, 6:45 p.m.
NASDAQ Takes Its Turn
By Bethany McLean
Today was all about the NASDAQ, which jumped 20.23, to a
record 1863.26. The Dow mostly just limped along, until a
late-day rally sent it up 52.07, to 9162.27. The S& P? A
snooze. It closed up 3.57, to 1119.32. Want to know what
made the tech-heavy NASDAQ so happy? Compaq! No, I KNOW
Compaq isn't traded on NASDAQ, but its 96% plunge in profit
had traders showering their gratitude all over tech land.
Hey, it could have been worse! And thanks to the March
pre-announcements, we knew the bad news already (if we all
shared our secrets, would the world be a better place?).
Anyway, today everyone is remembering that we invest for the
long term, and of course, the second half of the year will
be wonderful.
COKE FIZZLES.... Well, just a wee bit. The stock slipped $1
1/8, to $76 11/16, despite earnings that met Wall Street's
(low) expectations. All it took was a 13% DROP vs. last
year. Yeah, last year's results were sweetened by a one-time
gain. So strip that out: Earnings rose a whole 3%. How
impressive. Worldwide volume was up 14% (without three extra
shipping days it would have been up 9%), but revenues only
grew 7.7%. You know, that strong dollar. OK, Coke is a cash
machine, and in the future everyone in the world will brush
her teeth with Coke. But earnings are supposed to be FLAT in
1998!!!! And the stock sells for 46.8 times those FLAT
earnings!! And how come when the dollar was weak, the extra
oomph from currency translation was considered one of the
benefits of being a big multinational? Well, at least Coke
makes bank stocks look like a bargain.
DESPITE TECH'S TRIUMPH.... everyone is all confused about
Intel. After yesterday's close, it looked like the market
was focusing on whatever good news it could find. In
after-hours trading, Intel moved up. But today, the stock
gyrated wildly between a high of $79 1/8 and a low of $74
3/4, finally closing down $1 1/8, to $74 7/8. BA Robertston
Stephens, Morgan Stanley, and Soundview all upgraded the
stock. Morgan said "strong buy," Soundview talked a $90
price target; BA talked $100. But Tom Kurlak, the
influential Merrill analyst who's considered the "ax" on
Intel, downgraded it. Then, CNBC reported that Kurlak said
the stock could fall to $60. Stay tuned...
MUSIC TO THEIR EARS.... (and pocketbooks). The RZO
Companies--which handles the business affairs of
entertainment stars like The Rolling Stones and Patti
LaBelle--is joining up with Prudential Insurance to form a
new company, Entertainment Finance Limited. The concept is
based on 1997's David Bowie deal. Remember that? Prudential
bought $55 million of Bowie bonds. Bowie gets the bucks now;
Pru gets the future royalties on sales of songs like Blue
Jean (I love Blue Jean). So this new company, EFI, will pay
recording artists, book and software authors, songwriters,
and even other entertainment companies for their
intellectual property assets. EFI expects to handle more
than a billion dollars of transactions annually, though
there's nothing they'll talk about yet. Says RZO co-founder
Joe Rascoff: "Our clients are interested and hopeful." Hey,
what about journalists? They say the financings will be as
small as a half a million bucks. I'm worth that.
Loose Change
APPLE MADE MONEY!!! $55 million!! More than DOUBLE analysts'
estimates!!ÿ GO, Apple.ÿ Beat the evil empire!... Cendant
said that it's going to restate 1997's earnings. Watch
out.... Disney just can't keep those super CFOs. Young gun
Richard Nanula is walking out to become the CEO of Starwood,
beefing up chairman Barry Sternlicht's forces. Gotta wonder
what Nanula's predecessor at Disney, Stephen Bollenbach,
thinks about that. Remember the bruising battle that
Starwood and Hilton waged last fall for ITT?? Are things
like this really just coincidence?... Speaking of Disney,
CSFB says it's worth $150 per share, 32% above current
levels. The thesis: that $36 of value is "hidden" in places
like the Animal Kingdom. Think it's stashed near the
piranhas?... Yes, search engines continued to soar, but I'm
sick of talking about them.... Bear Stearns fell $2 1/2.
Investment-banking revenue grew a wimpy 4.6% and net income
barely budged. In this market, those results aren't
pretty.... Schwab said its average commission during the
quarter fell over 10% from just three months ago, due to
growth in less lucrative Internet trading. See, the Net
isn't good for everyone.... Deutsche Bank is supposedly
scaling back its U.S. investment-banking ambitions, but DMG
just hired Wes Maat, a top-ranked oil analyst. Now, we all
know he didn't come cheap.... A company called Creditrust
filed for its IPO today. It acquires and manages delinquent
consumer debt accounts. Such a nice business.
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