: 384 Times Earnings? No Method To That Madness
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
12:52 (Dow Jones) Buckingham Research downgrades WebMethods (WEBM) intraday,
warning that its stock has come too far too fast. It has doubled to $40
since warning on April 5 of a 4Q shortfall. And although analyst Ken Kiarash
thinks it's still a good company, it now sports a market cap of $1.9B and
trades at 384 times calendar 2001 EPS estimates. (MLP)
12:37 (Dow Jones) Despite doubts from some analysts about the realness of
EUR's rally, the single currency continues to grind higher against USD.
EUR/USD hit 0.9044 a few minutes ago, now at 0.9035. USD/JPY holding to
mid-122 range, now at 122.47. (RF)
12:25 (Dow Jones) Even though Merck beat Merrill Lynch's first quarter
estimate by a penny, the firm wasn't overly impressed with the drug giant's
numbers. "Gross margins were weaker than our estimate by 301 basis points,
which we believe is the result of a weaker than expected Vioxx figure, the
initiation of DuPont equalization payments, and strong Medco sales (Medco is
a lower margin business). While hitting the [consensus] number ... we are
not overwhelmed by this quarter's performance." (GSX)
12:12 (Dow Jones) Thought this year was a roller-coaster - just wait until
2002. Investment strategists at leading firms expect next year's profit
growth to range from 3% to 32%. The diversity of opinion, while causing a
bit of confusion, also "creates opportunity," said Steve Galbraith, market
strategist at Morgan Stanley. "When everyone is on the same page, unexpected
disappointment can be severely punished." (KJT)
12:00 (Dow Jones) Good and bad surround latest weekly mutual fund flows,
says US Bancorp Piper Jaffray's Brian Belski. The good: for the first week
since Jan. 31, financial, health care, and technology sector funds all
showed net inflows for same period. The bad: although stock funds showed
strong diversified net inflows for second straight week, outflows from money
market funds far outweighed inflows to equity funds (tax man?). Bottom line:
he believes the broad inflows across growth sectors is credible evidence
investors are starting to invest again. (TG)
11:49 (Dow Jones) Commerce One's (CMRC) March quarter shortfall might not
have been as dismal as rival Ariba's (ARBA), but Commerce One's balance
sheet sure looks ugly, analysts say. Commerce One, which unlike Ariba hasn't
announced job cuts, burned through $92M in the quarter leaving it with
$250M. Also, it relied heavily on partner SAP (SAP) for half its license
sales, pulled from its deferred revenue balance and saw DSO's spike. Stock
down 17% to $11.33. (MLP)
11:40 (Dow Jones) With another lower-than-expected earnings report,
Honeywell International (HON) continues to act like the embarrassing uncle
at family gatherings. But General Electric (GE) stands by Honeywell and
remains "excited about the Honeywell acquisition," says GE President and
Chairman-Elect Jeffrey Immelt in a written statement. Honeywell reported
ongoing earnings of 51 cents a share for the 1Q, below the Street's 58 cents
consensus projection. (CCW)
11:32 (Dow Jones) PNC missed 1Q consensus forecasts by a nickel, largely due
to venture capital losses and write-downs tied to the downsizing of its
corporate loan portfolio, namely in communications, energy, metals and
mining product industries. While the quarter is muddled by several unusual
items, analysts say underlying trends actually remained quite solid. (TAS)
11:25 (Dow Jones) Defaults increased in the 1Q, with telecom loans leading
the way, according to S&P Portfolio Management Data. The quarter saw nine
new defaults, up from seven in the 4Q and eight in the 1Q of last year. Of
the nine 1Q defaults, four were by telecom issuers. The figures don't
include the recent default by telecom upstart Winstar (WCII), which happened
after the 1Q. (JAW)
11:13 (Dow Jones) Floor traders say it's important to watch how June Nasdaq,
DJIA and S&Ps trade in the afternoon session. If the markets are
significantly firmer, say if June S&Ps are up 10 points, those gains could
be held into the close. However, a weaker trade could encourage profit
taking and lead to further losses. (DMC)
11:05 (Dow Jones) The 1Q brought an average-daily-volume record to Nasdaq,
with 2.1 billion shares typically trading, a 15.8% increase from the
year-ago's 1.8 billion. Twenty-two of the 50 heaviest trading days ever on
Nasdaq took place in the 1Q. Alas, the dollar volume in the quarter was $3.8
trillion, a drop of 36.7% from a year ago. (TG)
10:53 (Dow Jones) Alex Henderson, of Salomon Smith Barney, predicts the
recent rally in telecom-equipment stocks will gradually run out of steam. In
general, the stocks he covers are up between 40% and 140% since the
beginning of April, yet the service providers, the core customers for most
of these companies, have seen their stocks lag significantly, with "price
action ranging from down 25% to up 20%." Henderson thinks "the service
providers need to confirm the equipment stock recovery before a sustained
rally can be achieved or the recent gains can be extended." The equipment
vendors most heavily dependent on service providers include Nortel Networks
(NT), Lucent Technologies (LU) Ciena Corp. (CIEN) and Sycamore Networks
(SCMR). (BED)
(END) DOW JONES NEWS 04-20-01
12:53 PM
*** end of story *** |
