*=====================================================================*
Thomson I-Watch Morning Update
thomsoninvest.net
*=====================================================================*
*=====================================================================*
Market-Moving News
*=====================================================================*
* Investors in Japan selectively picked over yesterday's losses,
pushing the Nikkei Index 0.7% higher to 16,280.5. Late session
futures-led buying further buoyed the Index. However, stocks
remained in a narrow range as investors await further direction.
In Hong Kong, news that Hutchison Whampoa withdrew from a telecom
consortium that won a mobile phone license in Germany sparked heavy
selling. The losses helped dragged the Hang Seng Index 1.0% lower
to 17,440. Late-session bargain hunting in other telecom issues
mitigated some of the damage.
* Equities traded in the UK are bucking the broader European market
trend, with the FTSE hovering on the plus side. The FTSE is up 0.1%
at 6,625, but well off its earlier highs. In France, losses in
France Telecom (FTE) has helped pull the CAC40 down 0.2% to 6,621.
In Germany, telecoms likewise are pulling stocks lower on the close
of the UMTS telecom auction. The DAX has tumbled 0.4% to 7,247,
pressured by Deutsche Telekom (DT) and MobilCom.
* US stocks are poised to open mildly higher this morning. The S&P
Futures are trading up 2.0 points, while Fair Value is at negative
0.8 points.
* The expiration of stock and index options this morning may create
some volatility in the market, as traders unwind their positions.
However, options-related activity should help boost volume.
* The trade gap widened to $30.62 billion in June from the previous
month's deficit of $30.31 billion. A survey of economists by
Thomson IFR forecast the trade deficit would expand to $31.4 billion.
Higher oil prices as well as consumers strong demand for imported
goods contributed to the record gap. However, the smaller-than-
expected expansion should help lift investors' spirits. June
exports surged to $90.56 billion while imports climbed to $121.18
billion.
* IPO Calendar:
Avistar Communications (AVSR), a video networking company, will go
public today at $12 per share, priced below its anticipated $13-$15
range. The firm will offer 3.6 million shares.
Communications power equipment maker Peco II (PIII) priced its 5
million-share offering at $15 each, priced in the middle of its
expected range.
*=====================================================================*
Stocks to Watch
*=====================================================================*
* Analyst Recommendation Revisions:
Josephthal & CO raised its rating on Hewlett-Packard (HWP) to a "Buy"
from a "Hold" on the heels of the firm's FY00 3Q earnings. ABN Amro
upgraded Ciena Corp (CIEN) to an "Outperform" rating from a "Hold,"
noting confidence in continued rapid growth in optical networking.
The analyst revised the firm's FY00 4Q earnings estimate up to $0.21
from $0.25 and increased the FY 2001 estimate to $1.24 from $1.00.
SG Cowen Securities lifted Agilent Technologies (A) to a "Strong Buy"
from a "Buy" rating and raised its price target to $80-$85,
following the firm's earnings results. The first stated that the
current share valuation represents a positive risk-reward ratio.
Bear Stearns likewise upgraded A to an "Attractive" rating from a
"Neutral," noting that the company appears back on track, although
there is a lot of work ahead before A deserves a "Buy" rating.
Bear Stearns cut its rating on Phillips Petroleum (P) to a "Neutral"
rating from "Attractive" based on valuation. Banc of America
Montgomery lowered Linens 'N Things (LIN) to a "Buy" from a "Strong
Buy" rating on reports that August sales have fallen below plan.
Robertson Stephens downgraded NetSolve Inc (NTSL) to a "Long Term
Attractive" rating from a "Buy" due to reduced revenues and
earnings expectations, related to the change in NTSL's product and
customer mix, as well as the downside risk from increased
competition.
Robinson-Humphrey cut Birmingham Steel (BIR) to a "Neutral" rating
from an "Outperform" based on expectations that BIR's move to
profitability will likely be delayed by weaker steel demand and
prices.
Prudential Securities reduced its rating Teligent Inc (TGNT) to a
"Hold" from a "Strong Buy" and reduced its 2000 and 2001 earnings
estimates. Prudential cited TGNT's creeping expenses, financing
risk, and the overall difficult environment for CLECs due to the
Verizon (VZ) strike.
* Institutional Money Flows
Brokerage stocks were back in the black yesterday, after taking a
breather in the previous session. GS surged $5 5/8 to close at $118
5/8, LEH surged $11 1/16 to $137 7/16, and MER climbed $5 1/16 higher
to $141 9/16. Airlines descended throughout the session, pressured
by UAL Corp's (UAL) profit warning and higher crude oil prices. UAL
dropped $5/8 to $48 7/8, DAL fell $1 5/16 to end the session at $49
9/16, and U lost $5/8 to $36 1/2.
* American International Group (AIG) will buy HSB Group HSB) for
$1.2 billion or $41 per share in cash and stock. HSB shareholders
will receive AIG common shares, or a combination of cash and stock.
AIG expects the acquisition to close late this year or early 2001
and add to the firm's FY 2001 net income. HSB closed Thursday's
session at $38 11/16, while AIG ended the session at $87 1/2.
* Honeywell (HON) restated that it expects to report 3Q earnings of
$0.76, in-line with the First Call/Thomson Financial mean estimate.
The company confirmed plans to exit its non-core business and
expects charges of $300-$350 million in 3Q related to the portfolio
changes. The company will also book $100-$125 million in charges for
cost-reduction activities in 3Q. Honeywell expects to recoup most of
the losses by recording a $450 million gain from the dispositions of
non-core operations, which should be completed by early 2001.
* Agilent Technologies (A) booked FY00 3Q earnings of $0.33, $0.04
ahead of the year-ago results and $0.13 above the First Call/Thomson
Financial downwardly revised mean forecast. The company said it is
comfortable with FY00 4Q earnings of $0.39, compared to the First
Call/Thomson Financial consensus estimate of $0.36. Agilent
Technologies also raised its FY 2001 revenue guidance to at least
20% from the previous forecast of 15% growth. In pre-opening trading
on Instinet, A is trading at $58, $3 3/4 above Thursday's after-hours
close at $55 3/4.
* ADC Telecommunications (ADCT) reported FY00 3Q earnings of $0.17,
rising from the FY99 3Q earnings of $0.09. The results beat the
First Call/Thomson Financial consensus estimate by 2 cents. Including
one-time items, ADCT earned $0.02. Separately, ADC Telecom restated
its results for FY 1998, FY 1999, FY 2000 1Q, and FY 2000 2Q, due to
the company's acquisition of PairGain. ADCT lowered FY 1998 earnings
to $0.33 from the previously reported $1.08, trimmed FY 1999 earnings
to $0.31 from $1.34, reduced FY 2000 1Q earnings to $0.08 from $0.18,
and cut FY 2000 2Q earnings to $0.10 from $0.29. In pre-opening
trading, ADCT has risen $3 1/8 to trade at $47 1/2.
* Borders Group's (BGP) FY01 2Q loss narrowed to $0.02 compared with
last year's same-quarter loss of $0.03. A survey of 9 analysts by
First Call/Thomson Financial predicted a loss of $0.03. Separately,
Borders named Edward Wilhelm SVP, CFO effective immediately.
Wilhelm will replace Kenneth Scheve, who will retire by year-end. |
