DJ MARKET TALK: Tower Of Debt May Curtail Payments
2001-09-06 14:42 (New York)
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
2:41 (Dow Jones) American Tower (AMT) said its substantial level of debt
increases the possibility that it might not be able to generate enough cash to
make debt payments. As of June 30, it had $3.6 billion of consolidated debt
outstanding. The company said it might get additional long-term debt and
working capital lines of credit to meet future financing needs. (CC)
2:28 (Dow Jones) Pricing trends in the upscale segment of the lodging
industry have deteriorated in the last two months, with a meaningful 3.9%
decline in July, noted Robertson Stephens analyst Harry Curtis. These pricing
trends, most relevant to such hotel chains as Marriott International Inc. (MAR)
and Hilton Hotels Corp. (HLT), are likely to continue, said Curtis, adding that
many hotels defend market share by lowering prices. Marriott off 5% after word
of soft August. (DDO)
2:13 (Dow Jones) The slump in Internet advertising hasn't stopped AOL Time
Warner's (AOL) HBO unit from experimenting with the medium. In one example,
what looks like a typical banner ad for HBO's upcoming "Band of Brothers"
mini-series about D-Day appears on the Weather.com Web site. But suddenly, the
ad morphs into a lively animated battle sequence. Warplanes soar across the
upper-left corner of the site, then drop paratroopers, all with accompanying
battle audio. That's some weather forecast. (PDL)
2:03 (Dow Jones) Merrill Lynch insurance analyst Jay Cohen expects auto
insurers will continue raising prices as the industry continues to feel margin
pressure. In the 1Q, industry loss ratios remained relatively high compared
with the prior three years, but improved modestly, Cohen said. Earned premiums
rose by 4.6% in the period, he said. Second-quarter industry results are
expected in the coming weeks. (CUB)
1:51 (Dow Jones) The more-than-57% slide in investment bank fees generated
from completed mergers and acquisitions in the U.S. so far this year is bound
to get a lot worse before it gets better. Banks sometimes get a little cash up
front, but typically don't get paid for advising on a deal until it closes.
That lag time points to a pretty bleak 2002, given that Thomson Financial's fee
stats - at $712 million for the year to date - don't yet reflect this year's
accelerated slump in new deals. Total deal volume is off 52% at $593.7 billion,
while the number of deals is down 35% to 5,071. "In the first half of 2002, the
numbers are going to be pretty pathetic," says Richard Peterson, Thomson's
chief financial strategist. "Instead of $700 million or so, the fee tally may
be $400 million." (JAW)
1:37 (Dow Jones) Freddie Mac's 30-year fixed-rate mortgage fell to 6.89%,
with 0.9 point, for the week ending Sept. 7. The rate, also seen in the week of
March 22 and Jan. 11, is the lowest of the year. The 15-year mortgage also fell
to 6.44%, with 0.9 point, from 6.47% and 1-year ARM rate fell to 5.64%, with
0.9 point, from 5.67%. (JSX)
1:26 (Dow Jones) With a number of major exploration projects in the works,
oil giant Exxon Mobil (XOM) could be poised for more production growth than
anyone ever imagined, said Deutsche Banc Alex. Brown's Dave Wheeler. He's
looking for Exxon to almost double its 3% growth target by 2004 to 2005.
Wheeler expects oil production to grow 5% to 6% on average between 2003 to
2006, with a production peak of 6% to 7% in 2004 to 2005. (CCC)
1:15 (Dow Jones) At 9866, the DJIA is about 40 points off its low, but
remains down 167 points on the day. Treasurys are taking a breather after a
stunning morning rally. The two-year note is down 11 BP in yield on the day at
3.65%, as more than half of Tuesday's NAPM-inspired drubbing has been retraced.
There is a so-called "Fed sources" story being talked about that says
policymakers are unimpressed with improving economic data, but the stock market
is the main force here. (SV)
1:04 (Dow Jones) Another sign of investor anxiety ratcheting up: in the
options market, the CBOE's market volatility index, or VIX, has jumped to well
over 30, this despite DOJ indication it won't pursue a breakup of Microsoft
Corp. (MSFT). This options market fear gauge jumped 3.13, or 11%, to 32.09 - a
significant move since VIX hasn't closed above 30 since April 24. To some
options strategists, this is a sign that a market bottom might be closer. The
CBOE's put/call ratio for equity options continues to be high at 0.81; the
ratio for index options also is high at 2.24. (KT)
12:55 (Dow Jones) Mainstream media is in a slump because of the ad crunch,
but an alternative-news format appears to be gathering steam - to say the
least: Toronto's NakedNews.com just held its first auditions outside of Canada
and this week introduced its new, Los Angeles-based correspondents. NakedNews,
owned by eGalaxy Inc., is a free Website "with nothing to hide" that claims 6M
viewers a month. Anchor Aiko Tanaka, 25, will cover fitness, fashion, food and
California culture, while Julian Bryce, 28, reports on major news. In the buff,
natch. (GC)
12:46 (Dow Jones) Sept. S&P futures dip briefly to 1109.50, a new low for the
day and just under the four-month low of 1110 posted April 4. A move lower
would test further support at 1100. (DMR)
12:43 (Dow Jones) Oct. Fed funds continue to rally across the board. Oct.
last up 4.5 BP at 96.68, which shows chances of quarter-point cut at Oct. FOMC
now back up to about 75%, futures analyst says. Odds were about 60% earlier.
(SPC)
12:36 (Dow Jones) EBay (EBAY) Thursday announced the official launch of its
EBay Stores service, which allows large merchants and retailers to list all
their for-sale items on one Web page. EBay will now begin aggressively
marketing the service to consumers. The company already has more than 20,000
merchants actively selling through the service, far more than EBay initially
expected. Analysts caution, however, that some merchants could drop out when an
initial free subscription period ends Oct. 1 and EBay begins charging $9.95 a
month plus a nickel for each listing. (RS)
12:25 (Dow Jones) Nasdaq and S&P futures sit just above session lows, and are
in a "very, very dangerous situation," analyst says. "If you get below the
lows, you'll see an acceleration of selling. What you want to see is a
successful test of the lows." Buyers are wary to step in however, having been
burned in the past. (DMR)
12:22 (Dow Jones) Merrill Lynch is talking up advertising holding company
Omnicom Group (OMC). Lauren Rich Fine, a media and advertising analyst with the
firm, says despite investor concern that Omnicom might lower expectations, "we
disagree." Instead, she says, the company's stock valuation is "very
attractive," and a talk with management give her confidence that "the company
is on track for $1 billion of new business in the current quarter," unless
"there is a big loss they are unaware of." She is maintaining her EPS
estimates. (BS)
12:11 (Dow Jones) Prudential analyst John Barton says yesterday's selloff of
Alpha Industries (AHAA) following cautious comments from Ericsson (ERICY) was
overdone. The firm also noted that Ericsson isn't even a 10% customer for
Alpha, whose main exposure lies with Motorola (MOT) (which warned earlier
today). The analyst reiterated his buy rating and $42 price target on the
stock, and said "we are confident that Alpha's quarter is on track for 5%-10%
sequential revenue growth in September." Alpha's shares, which fell more than
16% Wednesday, were recently off 9% at $22.80. (CD)
12:01 (Dow Jones) Aflac's (AFL) quirky mascot takes to the ice this week for
the Columbus, Ga., insurer's latest commercial, which debuts Saturday during
the women's final of the U.S. Open. The white duck, which incessantly says
"Aflac," instead of "quack, quack," will try to hawk the insurer while two
amateur figure skaters discuss health insurance, according to the company.
Slip-sliding frivolity is expected. (CUB)
11:50 (Dow Jones) Citing a "greater than expected" negative impact of the
U.S. economic slowdown coupled with diminished capital flows, BBVA revised GDP
growth in Latin America to just 1% from 4% at the beginning of the year.
Mexico, which has benefited the most from economic integration with the U.S.,
will now suffer the most, BBVA says. The bank expects just 0.2% GDP this year
and 3.5% in 2002. (EK)
11:40 (Dow Jones) Wal-Mart's (WMT) sales at stores open at least a year
gained 7% in August, beating its plan for a 4% to 6% increase, as well as
analysts' expectation of a 5.8% gain. A Thursday statement on the company's
website, however, added that Wal-Mart was keeping its 3Q guidance of 33 cents,
and that it still expects a September same-store sales gain between 4% and 6%.
That shows Wal-Mart was forced to cut its prices heavily to surpass its August
same-store sales plan, said Eric Beder of Ladenburg Thalmann. "They are
primarily driving the revenues by cutting margin, and that shows there is a
limited upside for the quarter," Beder said. "Investors are realizing that this
turnaround in the third quarter, it ain't happening." (JMC)
11:33 (Dow Jones) Youch! Investment bank fees generated from completed
mergers and acquisitions in the U.S. total $0.712 billion year-to-date, down
more than 57% from the $1.664 billion recorded for the same period last year,
according to Thomson Financial. (JAW)
(END) DOW JONES NEWS 09-06-01 |
