Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (113402)	2/15/2002 3:21:15 PM
From: sea_biscuit	Respond to of 152472

What we are seeing is the dismantling of the irrational confidence among the investors. Over the last 3 months, they had packed the bear in a coffin and buried it. But the bear was just asleep! He is getting up again now.

To: slacker711 who wrote (113402)	2/16/2002 8:59:43 AM
From: Dennis Roth	Read Replies (1) \| Respond to of 152472

Concern grows over squeeze on corporate funding news.ft.com By Gary Silverman, Joshua Chaffin, Jenny Wiggins, Richard Waters and Vincent Boland in New York Published: February 14 2002 16:06 \| Last Updated: February 15 2002 23:24 Growing concern about access to short-term capital sent tremors through Wall Street on Friday amid signs that more companies are about to be frozen out of the commercial paper market, the main source of day-to-day corporate funding. Investors dumped stocks of telecommunications companies after Qwest Communications was forced this week to turn to its banks for $4bn after it was squeezed out of the commercial paper market. It had failed to find buyers for an issue of new short-term funding. Concern that others will suffer the same fate rose after JP Morgan Chase said Sprint, another US carrier, was "overextended" in the commercial paper market. Given the problems encountered by Qwest, "certainly there is a reasonable chance that Sprint will have to look elsewhere for financing", the bank said in a research note. A Sprint spokesman said the company had not met any funding problems. "We're finding liquidity and placing our paper," he said. Sprint had $3bn of commercial paper outstanding at the end of last year. Earlier this month it said it would need to raise an extra $1.7bn to meet its funding needs this year, although Wall Street analysts expect it to need $2bn or more. The collapse of Enron has exacerbated fears of investors in the commercial paper market, making them wary of issuers with any hint of earnings or accounting problems. Analysts said competitors of Enron, the bankrupt energy trading group, could also encounter problems raising short-term capital. Carol Levenson, director of research at Gimme Credit, pointed to the energy companies Williams, Mirant and El Paso. Ms Levenson also identified Toys "R" Us, the toy retailing giant, which is cutting jobs and closing underperforming stores. The degree of nervousness among investors about buying newly issued short-term paper from issuers at the low end of the ratings scale can be gauged from the sharp contraction in the size of the market. According to the Federal Reserve, the amount of non-financial commercial paper outstanding fell this week to $209bn, 40 per cent below the levels of November 2000. The latest reverberations in the commercial paper market were triggered last week when Tyco International was forced to draw down $14.5bn of bank funding to repay all its commercial paper debt outstanding. Joseph Nacchio, Qwest chief executive, blamed heightened investor nervousness for the company's liquidity problems. He said Qwest would hold a weekly conference call with investors to answer any questions about the company and to clear up "all rumours" in the market. The impact of the squeeze in the commercial paper market has been greatest in the bottom end of the market, among companies with short-term ratings of A2/P2. The spreads between rates on individual issues has widened to between 50 and 75 basis points, up from 15 to 25 basis points, traders said on Friday. More highly rated companies were not affected. "It's definitely sector-related. The telecoms sector is having a hard time," said Robert Porter, an analyst at Bank of America. "Other issuers, such as food products companies, are still having good access." Traders said volatility would continue as more companies were forced to go to more expensive sources of capital such as the bond markets or bank loans. ======= Its something of a vicious circle. Credit fears close off the commecial paper market to telecom companies, that forces them to use expensive bankloans. The news that they can't sell commercial paper causes more fear that closes off more companies off from the commecial paper market. and the news of that causes more fear that....