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Thomson I-Watch Morning Update
thomsoninvest.net
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Market-Moving News
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* The unwinding of cross shareholdings pulled stocks lower again
today as traders prepare for the end of the first half of the
fiscal year. However, traders indicate that investors remain
positive, based on expectations for stronger earnings growth. The
Nikkei Index tumbled 0.7% to close at 16,739.8. In Hong Kong,
stocks tore higher as investors put interest rate fears on hold and
focused on the recent consolidation speculation in the financial
industry. The Hang Seng Index surged 1.4% to 17,334.
* The major European bourses are surging higher on the back of
yesterday's rally. With the ECB interest rate hike out of the way,
large cap technology stocks are leading the winners. In the UK,
the FTSE 100 has surged 1.8% to 6,790, nearing its best levels of
the year. The DAX has jumped 1.6% to 7,330 in Germany, on strong
software and internet-related stocks, while in France, the CAC40
has vaulted 2.5% higher to 3,789 to record highs.
* Stocks are expected to continue yesterday's positive momentum.
The S&P Futures are trading up 14.4 points, well above Fair Value
at positive 0.2 points.
* Non-Farm payrolls dropped by 105,000 jobs in August, sharper
than the Thomson IFR consensus estimate for a 33,000 decline in
payrolls. July's results were revised to a decline of 51,000 jobs.
Average hourly earnings climbed 0.3% to $13.80, in-line with
economists' expectations. The unemployment rate inched up to 4.1
from the previous month's rate of 4.0%. The government added that
the Verizon (VZ) strike and the lay-off 158,000 census workers
contributed to the decline in payrolls. The softer-than expected
data will sustain investors' confidence that the Federal Reserve is
finished raising rates for the near-term.
* At 10:00, the construction spending figures for July will be
released by the Commerce Department. A survey of economists by
Thomson IFR predicts construction spending rose 0.3%, after
dropping 1.7% in June.
* The National Association of Purchasing Managers will report on
manufacturing index for August at 10:00 as well. The Thomson IFR
forecasts the NAPM index will edge higher to 52.3 from last month's
reading of 51.8. While a reading above 50 still indicates expansion,
the past few NAPM indices indicates manufacturing activity has begun
to moderate.
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Stocks to Watch
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* Analyst Recommendation Revisions:
Legg Mason and SG Cowen lowered their ratings on Scient (SCNT) to
"Market Perform" and "Neutral," respectively, due to pricing
softness and weakening "dot com" demand.
William Blair lowered its rating on MedQuist (MEDQ) to a "Hold"
from a "Long-Term Buy" based on the company's lack of revenue
visibility.
Banc of America cut Pacific Sunwear (PSUN) to a "Market Performer"
from a "Buy," citing expectations for weak sales, slow-moving items
that will pressure 2H00 margins, and more difficult comparison
sales though 2H00. The firm also cut Limited (LTD) to a "Buy" from
a "Strong Buy," noting upside may be limited by a slowdown at
Intimate Brands (IBI), which contributes 50% to sales and 86% to
operating income in FY 2001.
Robertson Stephens cut Uno Restaurant (UNO) to a "Long-Term
Attractive" rating from a "Buy" rating due to the uncertainty
regarding same-store sales and earnings growth.
* Institutional Money Flows:
"Blue chip" tech stocks backed the NASDAQ Composite's gains
Thursday. ORCL surged $2 11/16 to $90 15/16, DELL popped $3 11/16
to $43 5/8, INTC added $1 3/8 to $74 7/8, and CSCO gained $2 1/16
to $68 5/8. Retailers got trounced on disappointing same-store
sales reports. TGT dropped $2 7/8 to $23 3/16, WMT gave back
$13/16 to $47 5/8, and GPS dipped $1/4 to $22 1/4.
* Fifth Third Bancorp (FITB) will acquire Ottawa Financial Corp
(OFCP) for $160.2 million in stock. Under terms of the deal, each
OFCP share will be exchanged for 0.54 shares FITB. FITB closed
Thursday's session at $46 3/16 while OFCP ended at $21.
* Yahoo (YHOO) will book a 3Q charge of $25 million related to the
company's acquisition of eGroup, which closed Thursday. A First
Call/Thomson Financial survey of 31 analysts forecasts 3Q earnings
of $0.12. In after-hours trading, YHOO has slipped to $2 3/4 to
$118 3/4.
* Sanmina Corp(SANM) will acquire Lucent Technologies' (LU)
messaging systems integration and manufacturing facility, for an
undisclosed amount. SANM will produce both the messaging systems
that LU sells to communications service providers and the enterprise
messaging systems which are sold by Avaya, the Enterprise Networks
Group that LU will spin off at the end of the month.
* Atlantic Coast Air (ACAI) sees 3Q net income in the range of $0.30-
$0.35, below the First Call/Thomson Financial consensus estimate of
$0.54, and expects 3Q revenue will fall below plan. The company
also said that 4Q net will fall between $0.45-$0.55, compared to
the First Call/Thomson Financial mean forecast of $0.64. ACAI
attributed the shortfall to higher fuel prices and UAL Corp (UAL)
problems.
* Global Crossing (GBLX) raised its 2000 revenue and EBITDA (earnings
before interest, taxes, depreciation and amortization) estimates for
the year, citing strong demand. GBLX said it expects cash revenue
from continuing operations will be roughly $5.2 billion, up from
previous estimates of $4.84 billion. GBLX raised EBITDA estimates to
$1.34 from $1.21. However, the company expects 3Q EBITDA will not be
significantly above 2Q due to a seasonally weak quarter.
* Nordstrom (JWN) said both CEO John Whitacre and CFO Michael Stein
will resign, after recent the company's earnings and sales
disappointments. Nordstrom named Bruce Nordstrom as Chairman and
Blake Nordstrom as President. The company is conducting a search for
a new CFO.
* Hertz (HRZ) cut its earnings outlook over the next three quarters,
due to lower demand. HRZ expects 3Q earnings of $1.30 and 4Q
earnings of $0.51, below the First Call/Thomson Financial consensus
estimates of $1.43 and $0.63, respectively. Hertz also said it
expects FY 2001 1Q earnings will be below the FY 2000 1Q results of
$0.52. According to First Call, one analyst predicted earnings of
$0.53.
* Viant Corp (VIAN) said it plans to report a loss for 3Q and
reported revenues will fall 12%-15% from its 2Q revenue of $38.5
million. A First Call/Thomson Financial survey of analysts
forecast a profit of $0.08. VIAN attributed the shortfall to the
turn away from "dot com driven demand."
* Intermet (INMT) warned that serious production problems will cut
3Q earnings by $0.16-$0.18. The First Call/Thomson Financial mean
estimate was $0.36. Intermet added that it would book a gain
related to the sale of select non-core assets, which will more than
offset the shortfall. The company expects to close the deal in 3Q,
though it may be until October.
* Wind River Systems (WIND) stated FY01 2Q earnings of $0.10, even
with the year-ago results. The earnings topped analysts' estimates
by $0.03. Including $1 million in acquisition charges and $26.8
million in the amortization or goodwill, WIND reported a loss of
$0.24. |
