Qualcomm's May 65 Puts Attract Interest
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
3:02 (Dow Jones) As Qualcomm (QCOM) prepares to report its 2Q earnings next
Wednesday, investors looking for downside protection bought May 65 puts,
which traded actively Friday. Investors were willing to pay between $680 and
$710 a contract to lock in the right, until May 18, to sell 100 shares of
Qualcomm at a minimum price of $65. At the Philadelphia Stock Exchange,
Qualcomm's May 65 puts gained 90 cents to $7.50 on volume of 6,591
contracts, compared with open interest of 591. (KT)
2:50 (Dow Jones) Since 1990, there hasn't been a worse environment for IPOs,
according to Thomson Financial Securities Data. Just 26 deals have come to
market year-to-date, the lowest level in the last 11 years and far below the
previous low of 44, set in the first four months of April 1991. Still, big
deals like Agere (AGR.A) and KPMG Consulting (KCIN) have boosted total
proceeds this year to $7.73 billion, better than the comparable periods of
1990, 1991, 1995, 1997 and 1998. (RJH)
2:37 (Dow Jones) Choppy trade continues in June S&Ps. Very few features are
seen and floor traders say the April options expiration does have something
to do with that. It's likely the options expiration will give the contract a
bid and support trade. So far June S&Ps are hovering near 1250. (DMC)
2:25 (Dow Jones) Two more companies are taking a pass on the IPO market. CMS
Oil & Gas has withdrawn its deal, for $300 million, while Placeware has
shelved plans to sell 3.5 million shares at between $12 and $14 a share.
(RJH)
2:09 (Dow Jones) The spread on the General Electric (GE)-Honeywell (HON)
deal narrowed Friday amid speculation that the DoJ will green light the
merger over the weekend. The spread, which hasn't traded below $3 in weeks,
recently traded at a $2.92 discount to GE's offer. "If this rumor is
correct, it wouldn't surprise us in the least," says Andrew T. Whittaker,
head of arbitrage research at Lehman. GE's backing of the deal, despite
Honeywell's earnings shortfall, which was broadly within expectations, and
signs that Europe will OK the deal, also helped the spread, he says. "I'm
surprised it's not narrower." (JAW)
1:53 (Dow Jones) June bonds have slipped to a new low for the session of
100-04 thanks to stock strength. Late pre-weekend extension of losses in
bonds making for an even more grim technical picture. "Clearly strong-handed
sellers have the upper hand," analyst says. (CMN)
1:50 (Dow Jones) Milk-related companies could be getting creamed, as milk
prices keep going up, says Prudential analyst John McMillin. Raw milk prices
are up 23.8% year-over-year and butterfat prices are 63.4% higher, he says.
That means a tough operating environment for Dreyer Ice Cream (DRYR), Dean
Foods (DF), and Suiza Foods (SZA), he says. (RJH)
1:36 (Dow Jones) This week's move by the Fed was "classic monetary policy at
work," says Dr. Michael Swanson of Wells Fargo Economics. "Only the
unexpected has the power to make an impact," he says. Meanwhile, the rates
of change in key leading indicators continue to give conflicting signals.
Expect consumer confidence to catch the attention of investors Tuesday
because of this. (CMN)
1:22 (Dow Jones) Not much profit-taking seen in Comex gold Friday, but
neither is it responding as positively as it should to weaker dollar, says
broker. Prior short-covering rallies have topped at $265-$266 and fallen.
June down 50c at $265.30/oz. (DGB)
1:10 (Dow Jones) The Economic Cycle Research Institute's weekly leading
index edged up to 120.9 in the week ended April 13 after two straight weeks
at 120.7. ECRI uses the year-year growth rate as an indicator, which was
-5.6% for the latest week, the first time that the decline did not
accelerate in 10 weeks. (JM)
1:02 (Dow Jones) As Brocade Communications (BRCD) jumped $3.97, or $12.70,
to $35.33, some investors opened new positions and sold April 35 puts. These
at-the-money puts will expire today, and the investors likely are seizing
whatever opportunity to pocket premium and betting Brocade will close above
$35 (or they are willing to buy stock at that price). Brocade had risen
26.2% Thursday. The April 35 puts traded more than 19,150 contracts,
compared with open interest of 665, falling $7.20 to 30 cents at the CBOE.
(KT)
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)
(END) DOW JONES NEWS 04-20-01 |
