While there is bearish talk, optimism is still strong. From MONEY DAILY:
MarketRap
Water and fire
Who wants to be an IPO millionaire? Markets close mixed, but don't
nix hot Web offerings. Plus, stinky feet and flat soda pop.
By Bethany McLean
Wednesday, September 22, 1999
THE ODD COUPLE. The Dow and the Nasdaq just aren't getting along. Both
had choppy days, but the Dow closed down 74.40 at 10,524.07, while the
Nasdaq closed up 37.06 at 2,858.16. (The weakening dollar pulled the
Dow down; soaring 'Net stocks helped push the Nasdaq up.) It's
interesting that while there's plenty of bearish talk, it seems that
optimism is still strong: A seat on the NYSE sold for $2.55 million,
only a wee bit less than the record $2.65 million set in late August.
The S&P 500 closed up 2.93 to 1,310.51.
THE SONG REMAINS THE SAME. E-IPOs are back. Kana Communications
[KANA], which makes software that helps businesses manage customers'
e-mail, went public at 15, and closed at 51 1/2. E.piphany [EPNY],
which develops software that helps companies track consumer buying
habits, jumped from its offering price of 16 to 45 3/16. And Broadbase
[BBSW], which also makes software that integrates customer information
(is this beginning to sound familiar?), went public at 14 and closed
at 27 1/4. Did investors all simultaneously have a REAL epiphany? Or
is it just that the game worked so well - so why stop? Institutions
like Harvard's endowment are throwing money at venture capitalists
(take me! take ME!), venture capitalists get to run around and bestow
it on those deemed worthy (ooh! the power!) , investment bankers get
to get rich by taking a cut of the offerings, and institutional
investors get to make money off the poor fools who rush in to buy,
buy, buy on day one. Now, I think the M&A guys should swoop in and
merge Kana, E.piphany and Broadbase. More fees! Oh, but Hambrecht &
Quist (via Charles Schwab) is going to be our savior. Today, Hambrecht
& Quist announced that it will offer a new IPO & Emerging Company fund
to investors. So what happens when the IPO market dries up? Not that
it ever will, of course.
TIMES ARE TOUGHER. Well, sort of. Morgan Stanley's [MWD] profits
soared 55% in its most recent quarter, squeaking it past Wall Street
estimates by two cents. But Morgan Stanley gained just 3/4 to 89 9/16.
That's because in quarters past, the company has trounced
estimates--in fact, all the brokerage firms always trounce estimates
(unless disaster strikes, like last fall). So, the Street goes easy on
its own. Well, that's not quite fair: Market sensitive revenues ARE
very hard to predict. But why do analysts always lowball the brokerage
companies? Anyway, Morgan Stanley's quarter wasn't the usual blowout
because trading revenues declined 39% from the second quarter, in
large part because of rising rates. Poor baby.
MY FEET HAVE FAILED ME NOW. And Robinson Humphrey uttered the four
letter word, downgrading Just For Feet [FEET] from a "short term
market perform" (hee-hee) to a "short term sell." Too bad for
investors that Just For Feet has already fallen from over 20 earlier
this year to 1 5/8 today (it fell 15/16 today). Stomp. Now, 15/16
sounds tiny, but that is a 58% decline. So I have a question: Why
bother? Analyst David Magee says that "we were not positive on the
stock, and we went more negative." Magee adds that the shoe and
sportswear retailer's significant problem with cash flow "raises the
issue of bankruptcy," and that since the stock could go to 50 cents, a
downgrade is "meaningful."
SAMPLES
The Justice Department is filing a civil suit against Big Tobacco in
an attempt to recover the $20 billion a year that it says it spends on
smoking-related healthcare costs. Shares of Big Tobacco all fell.
Coca Cola [KO] fell another 1 3/8 to 52 3/8 today on less than kind
words by JP Morgan. JPM points out that despite the fact that Coca
Cola's projected earnings have declined over the past few years, its
multiple has actually risen. If anyone tells you that this market is
rational_oh, I'm sorry, I forgot: It's the new economy, stupid. (Yes,
JP Morgan maintained its long-term-buy on Coke.)
Has Bottomline [EPAY] hit bottom? About half a year ago, the business
software maker's shares cost almost $100 a share; today, they fell 8
1/2 to 16 1/2 after the company warned that it would miss earnings.
EPAY, you pay, we all pay.
We are the world! Amazon.com [AMZN] says that it will sell music
downloads via the 'Net. Hey, why not?
Yet another acquisition for Cisco [CSCO]. Everyone's favorite stock
agreed to buy privately-held WebLine communications, which makes
software for e-commerce, for $325 million. In stock, of course.
Buyouts in Buy-o-Tech? Hot bio-baby MedImmune [MEDI] agreed to buy
not-so-hot US Bioscience [UBS]. MedImmune climbed 7% to 109 1/4, and
US Bioscience climbed 23% to 14 1/ 8.
Best Regards, J.T. |
