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Market Movers
Oct 12, 1999
Midday Movers
(10/12/99)
Fears of rising interest rates are bringing stocks down. Technology stocks are helping the Nasdaq Composite hover near yesterday's record closing mark, although at last check it was 3 points into negative territory, down to 2912.95. But that's the closest we've had to good news this morning. The Dow Jones Industrial Average had been down as much as 120 points, and is stumbling along at 10550.03, down 98.15 points for the day. The S&P 500 Index is down 9.77 to 1325.44.
The market's breadth is just as bad as the Blue Chip's direction, with two losers for every one winner on the New York Stock Exchange and 1602 decliners over 1328 winners at the Nasdaq. Volume is moderate with at 188 million shares on the Big Board and 252 million shares traded over-the-counter.
How ‘bout them bonds? They are acting poorly and making a whole class of stocks get punished for their bad behavior. The yield on the 30-year Treasury is up 4 basis points to 6.24%, the highest level in 2-months and quickly approaching the 2-year high of 6.28% set back on August 12.
The concerns over rising rates are muting the response to a slew of better-than-expected earnings reports from financial firms.
The brokerage sector was abuzz this morning, as Donaldson, Lufkin & Jenrette (NYSE:DLJ - news) , Merrill Lynch (NYSE:MER - news) , and PaineWebber (NYSE:PWJ - news) reported third quarter earnings. DLJ rose $1.41 to $41.63 after reporting quarterly earnings of $0.85 per share, beating the $0.76 average analyst estimate, as fees from underwriting and advising on mergers increased. Revenue rose 91% to $1.3 billion.
Merrill Lynch was up fractionally, rising $0.94 to $68.69, even after reporting that third-quarter profit more than tripled. The brokerage earned $1.34 a share, beating the $1.29 average estimate. However, those figures exclude a year-ago charge for layoffs. Once the charge is factored in, Merrill posted its first quarterly loss since 1989. Revenue rose 39% to $5.3 billion.
Paine Webber fell $0.19 to $35.50 after it said third-quarter profit rose 67% to $0.86 per share, earning the $0.83 average estimate. Revenue rose 20% to $1.24 billion.
Dow components American Express (NYSE:AXP - news) and J.P. Morgan (NYSE:JPM - news) are both down. American Express is off $2.38 to $146.50 and Morgan is down $15 to $114.
Modem Media.Poppe Tyson (NASDAQ:MMPT - news) rose $10.13, or 25.5%, to $49.88 after pre-announcing better-than-expected third quarter revenue of $21 million, versus analyst estimates of around $16.6 million. The quarterly revenue represents a 90 % year-over-year increase, and are up 30% sequentially. Modem Media, which provides digital interactive solutions via the Internet, attributed the upside revenue surprise to new client wins, existing customer expansion and international growth.
However, while revenue will exceed expectations, earnings per share should still fall in the estimated $0.03 range. According to analyst Tara Long of C.E. Unterberg Towbin, Modem Media's earnings performance will reflect significant international expenses incurred in the quarter as the company established its presence in Asia.
Shares of FVC.com (NASDAQ:FVCX - news) rose $1.69, or 12.3%, to $15.44 on news that it will announce an alliance with British Telecommunications (NYSE:BTY - news) on Thursday to introduce a low-cost, video-conferencing service to Europe, the Financial Times reported. The collaboration with FVC, a video conferencing product maker, could enable the service to be supplied to British Telecom's ADSL service, which allows transmission of multimedia over traditional copper wires. British Telecom fell $1.88 to $166.75.
Vitria Technology (NASDAQ:VITR - news) , a provider of e-business infrastructure software, rose $12.06, or 26%, to $58.63 and traded to a 52-week high of $62.31 after announcing a strategic agreement with Clarify Inc. (NASDAQ:C - news) LFY) to bundle Vitria's product in the telecommunications market. Vitria's initial public offering came in mid-September, but a slew of analysts initiated coverage today: BancBoston Robertson Stephens and SoundView Technologies rate the company a “buy.” Lead underwriter Credit Suisse First Boston has a “strong buy.” Didn't think they were going to dis their client, did you?
Clarify lost $0.53 to $45.50.
Novellus Systems (NASDAQ:NVLS - news) rose $4, or 7%, to $77.19 and traded to a 52-week high of $78.50 on the heels of its better than expected earnings for the third quarter ended Sept. 25. Earnings of $0.54 a share, were 145% better than the year-ago period and 18% better than the I/B/E/S analyst average estimate of $0.46. Before the third quarter results had been reported, the maker of equipment used for building semiconductor circuits had reported double-digit losses from year-ago periods in four consecutive quarters. The latest results suggest that things may be looking up for the semiconductor sector.
“The semiconductor industry appears to be in the early stages of a broad-based recovery, inventories are low and demand is seen across all product types,” notes Richard Hill, chairman and chief executive, in a press release.
Intel Corp. (NASDAQ:INTC - news) is up $2.50 to $79 in anticipation of a strong earnings report from the leading semiconductor maker following the close of trading today. Estimates call for Intel to earn $0.57 per share for the third quarter, a 28% increase over the year ago period. But the “whisper number” among Wall Street insiders is looking for $0.60 per share. Also, Intel announced this morning that it will work with mobile phone maker, Nokia (NYSE:NOK - news) to make television set-top boxes that provide access to the Internet. This is part of Intel's strategy to broaden the use of its chips beyond the PC.
Shares of Nokia are down $1 to $98.25
Shares of Neon Systems (NASDAQ:NESY - news) are down $6.50 to $20.50 after the enterprise software company issued preliminary second quarter results stating that it expects to earn $0.06 to $0.07 per share. Estimates were calling for profits $0.08 per share for the period ended September 30. Neon said revenue will $6.0 million, also 15% below expectations. The company blamed “delays in customer orders until the last few days of the quarter when they then attempt to extract concessions” for the shortfall. It expects to close the deals in the near future and sees no need to revise future earnings estimates. Shares have declined 65% over the past six months over worries that sales would slow due to Y2K concerns.
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