MARKET TALK: With Freemarkets, It's The Economy, Stupid
Edited by Ray Hennessey
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
11:38 (Dow Jones) Ed McCabe of Merrill Lynch says the blame for Freemarkets'
(FMKT) poor visibility rests with the economy. "It's the economy rather than
the business that's not working," he said. With less money to burn,
Freemarkets' existing customers are not buying as much, and "getting new
customers to commit to any project is tough," he said. The analyst also
downplayed the B2B player's troubles with the SEC, which doesn't want the
company to classify income from its largest customer, Visteon (VC), as
revenue. That issue would only change "the presentation of the accounting,
but the bottom line is cash flow and that will not change," McCabe said.
(KWH)
11:30 (Dow Jones) Another encouraging e-commerce tidbit: About 100 million
adults in the United States, or nearly half of the nation's grown-ups, have
made a purchase online. More than 80% of adults with Internet access have
succumbed to the cyber-shopping urge. The news comes from Nielsen/NetRatings
and Harris Interactive, which have been been busy crunching numbers from a
March survey of Web users. "Online shopping is not trivial when more than 80
percent of all Web surfers and nearly one out of every two Americans are
involved," said Sean Kaldor, vice president of eCommerce at NetRatings. (RS)
11:21 (Dow Jones) UPS (UPS) is a great company, Morgan Stanley analyst James
Valentine says. Just not great enough to merit a strong buy rating.
Valentine has cut his rating to outperform, saying the company "has better
than 15% upside in its stock over the next year, but possibly not the 25% to
justify a 'strong buy."' Still, Valentine says UPS remains "the best core
holding in our universe." (RJH)
11:10 (Dow Jones) Treasurys market watching gasoline prices, hovering around
10-months high, benchmark wholesale May contract at $109.10, with supply
shortages in U.S. expected to push prices yet higher over the summer. Market
traders say fears of gasoline prices feeding inflation pressures in wider
economy may restrict Fed's freedom to cut rates somewhat going forward.
(JNP/MF)
11:00 (Dow Jones) In biotech, like baseball, three strikes and you're out.
Prudential has cut Sepracor (SEPR) to sell from hold in the wake of the
suspension of a study on a new version Johnson & Johnson's (JNJ) Propulsid.
With the product out, Sepracor has "now had its third major product either
fail or show questionable clinical advantage.," says analyst Peter Drake.
Drake now thinks Sepracor will face a cash shortage beginning in the third
or fourth quarter of next year. (RJH)
10:52 (Dow Jones) Cablevision (CVC) says it will focus on deleveraging over
the next two years. At a Bear Stearns conference here today, a company
official also said it wasn't interested in buying back 30 million of its
share from AT&T (T). (TS)
10:46 (Dow Jones) The problem for Guidant (GDT) is that analysts thought the
company had been almost too aggressive in lowering 2001 guidance in the
fourth quarter of 2000, and this year was bound to be better than these
depressed views. Wrong. With the recall of Ancure, which treats abdominal
aneurysms, and soft sales in other products, Guidant has talked down its 2Q
now - and, more importantly for analysts, refused to give year-end guidance.
Shares are off 11%. (RJH)
10:37 (Dow Jones) Merrill Lynch likes IBM's (IBM) acquisition of Informix's
(IFMX) database-software business for $1 billion. "This seems like a very
smart way for IBM to continue success in the database market," analyst
Thomas Kraemer. The key, though, will be how effectively IBM integrates the
business, he says. Informix's shares are off 22%, after the company reported
earnings. IBM is 2% higher. (RJH)
10:30 (Dow Jones) June Nasdaqs are posting an impressive rally after
consumer confidence results, even testing key resistance at 1866 after
surpassing several key resistance levels - 1834 and 1848. The news of
declining consumer confidence was tempered by the fact that the survey was
concluded before Fed's intermeeting interest rate ease, floor traders said.
(ZHS)
10:27 (Dow Jones) JDS Uniphase's (JDSU) stock is down about 9%, after it
lowered its fiscal 4Q earnings guidance, and announced job cuts and plans to
restructure parts of its operations, but SG Cowen analyst John Butler sees
some positives from the news. In a note, the analyst said he believes the
restructuring efforts allow JDS "to accelerate the integration of multiple
acquisitions as well as write off/downsize legacy businesses." While Butler
said it is likely he will reduce his financial estimates for the company
after JDS' conference call, the analyst believes JDS is "near the bottom in
terms of earnings reductions." (BED)
10:21 (Dow Jones) Treasury Traders say the Consumer Confidence data was weak
but not weak enough to encourage hopes for deeper than expected interest
rate cuts by the Fed. Inflation worries from higher gasoline prices are
fueling the weakness in the Long Bond. (MM)
10:18 (Dow Jones) Junk bonds are quiet but trading higher early on, with
gaming names up 1/4 on positive earnings, says trader. Also some activity in
the telecom sector, with Exodus (EXDS) trading higher on Cable & Wireless
PLC (CWP) acquisition rumors and XO Communications (XOXO) benefitting from
expectations of reduced capital expenditures. (RTB)
10:16 (Dow Jones) Trader says because consumer confidence data assembled
before last rate cut, numbers being perceived as "old news." He says higher
Treasury prices seen as opportunity to sell by many participants. Word is a
lot of move up ahead of release was short-covering. (CMN)
10:13 (Dow Jones) Treasury prices are trading lower after the release of
weaker than expected consumer confidence figures for April. The 10-year note
briefly entered positive territory but was last lower by 5/32 at 98 16/32 to
yield 5.198% (MM)
10:11 (Dow Jones) Stocks rise slightly after consumer confidence data.
Retailers immediately went lower but are now well off their lows. Wal-Mart
still the biggest loser on the DJIA, but Procter & Gamble has replaced Home
Depot in the penultimate position. Major indexes in the positive. DJIA up 62
at 10594. Nasdaq adding 15 at 2074. S&P 500 gaining 4 at 1228. (GS)
10:00 (Dow Jones) Conference Board's consumer confidence index fell to 109.2
in April from a downward-revised 116.9 in March. The main reason was
consumer concerns about deteriorating business and job worries. The cut-off
data for the survey was April 17, the day before the Fed's surprise rate
cut. The rise before that in jobless claims and the weakness in the stock
market were probably greater factors weighing on consumers. (JM)
(END) DOW JONES NEWS 04-24-01
11:38 AM
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