Nasdaq 100 may boot 12 tech, telecom stocks
biz.yahoo.com
Nasdaq 100 may boot 12 tech, telecom stocks-Salomon
Thursday October 17, 9:00 pm ET
By Thi Nguyen
NEW YORK, Oct 17 (Reuters) - Call them the deserted dozen.
About a dozen tech and telecom stocks probably will rank
among 17 companies getting the boot from the Nasdaq 100 (NasdaqSC:^NDX - News)
when the index of Nasdaq's biggest and most actively traded
companies is rebalanced in December, Salomon Smith Barney told
its clients on Thursday.
Salomon, the investment banking arm of Citigroup Inc.(NYSE:C - News),
expects the names deleted from the Nasdaq 100 will include
PMC-Sierra Inc. (NasdaqNM:PMCS - News), ADC Telecommunications Inc. (NasdaqNM:ADCT - News),
i2 Technologies Inc. (NasdaqNM:ITWO - News), Sanmina-SCI Corp. (NasdaqNM:SANM - News), and
Integrated Device Technology (NasdaqNM:IDTI - News). The stock prices of
those five companies on Thursday ran the gamut from i2
Technologies, which closed at 69 cents, to Integrated Devices
at $9.70.
Only one technology company -- Garmin Ltd. (NasdaqNM:GRMN - News), a
maker of devices used for global positioning systems -- is
earmarked to enter the index, according to Salomon. On
Thursday, Garmin closed at $18.99, up 39 cents.
If Salomon is right, the Nasdaq 100's new look will reflect
the trend of the past two years. At rebalancing last year, 13
tech stocks were deleted from the index -- once a proxy for
high-flying tech companies during the late 1990s dot-com boom.
The Nasdaq 100 -- with about $25 billion indexed to its
performance, according to Salomon -- began losing its
popularity with investors after the tech bubble burst in March
2000.
At the rebalancing, the Nasdaq 100's tech weighting will
slip to 56 percent from its current weight of 60 percent,
Salomon said. The rebalancing is likely to take place at the
close of trading on Dec. 20, Salomon said. At that level, the
Nasdaq 100 will have come almost full circle from its 54
percent tech weighting in 1990 -- a year of recession, a
buildup to U.S. war in the Persian Gulf, and a time when the
decade's dot-com madness was just a gleam in a geek's eye.
Nasdaq is expected to release the list of additions and
deletions before the market opens on Dec. 16, according to
Salomon.
BILLION-DOLLAR SALE FORESEEN
The Nasdaq 100 has lost 41.3 percent so far this year --
worse than the Nasdaq Composite Index (NasdaqSC:^IXIC - News), down 35 percent,
and the Standard & Poor's 500 Index (CBOE:^SPX - News), down 23 percent
since the close on Dec. 31, 2001.
The Nasdaq 100 Trust (NYSE:QQQ - News), the index's tracking stock
launched in March 1999, has dropped 39.8 percent this year. The
Nasdaq 100 Trust is one of the largest exchange-traded funds.
Yet on Thursday, after the stock market rallied for the
fifth time in the past six days, the Nasdaq 100 ended up 3.84
percent -- slightly better than Nasdaq composite's gain of 3.24
percent.
About $1.13 billion worth of shares will be sold by
indexers to replicate the changes in the index, or an
equivalent to the sale of about 11,800 Nasdaq futures,
according to Salomon. The shares will be sold because the
market value of the 17 companies whose stocks will be added to
the Nasdaq 100 is greater than that of the deletions, Salomon
said in its note to clients.
The composition of the Nasdaq 100 index is determined by
the Nasdaq Stock Market. For a stock to be selected, it must
rank among the top 150 stocks on the Nasdaq stock market by
market value, have an average daily trading volume of at least
100,000 shares and not be in the financial sector, among other
conditions.
The Nasdaq 100 index was first published in January 1985.
The Nasdaq re-ranks the index every year, based on the number
of shares outstanding and the stock price.
A BIGGER DOSE OF HEALTH CARE
Salomon predicted the weightings for the health care,
consumer discretionary and industrial sectors will increase in
the Nasdaq 100 index at the rebalancing.
Among Salomon's candidates for 17 additions to the index
are health benefit company First Health Group Corp. (NasdaqNM:FHCC - News),
which closed Thursday at $28.74, as well as rival dental
products suppliers Patterson Dental Co. (NasdaqNM:PDCO - News) and Dentsply
International Inc. (NasdaqNM:XRAY - News). Patterson ended Thursday's session
at $53.90 and Dentsply closed at $42.30.
Also on Salomon's "most likely" list to make the cut:
Dreyer's Grand Ice Cream (NasdaqNM:DRYR - News), the biggest U.S. ice cream
maker. Dreyer's stock ended Thursday at $70.35. In June, Nestle
SA (NESZn.VX) said it would merge its U.S. ice cream business
with Dreyer's.
Off-price retailer Ross Stores Inc. (NasdaqNM:ROST - News) and Pixar
Animation Studios (NasdaqNM:PIXR - News), the computer-animation company that
partnered with Disney to produce the blockbuster children's
movies "Toy Story," "Toy Story 2," and "Monsters, Inc.," also
are among Salomon's picks for new Nasdaq 100 names. Ross
settled at $41.93 and Pixar ended at $46.47 on Thursday.
Figure 1. Projected Nasdaq 100 Additions
Ticker Company
GRMN GARMIN LTD
CHRW CH ROBINSON WORLDWIDE INC
DRYR DREYER'S GRAND ICE CREAM
PDCO PATTERSON DENTAL CO
FHCC FIRST HEALTH GROUP
PIXR PIXAR
EXPD EXPEDITORS INTL OF WA INC
GNTX GENTEX CORP
XRAY DENTSPLY INTL
FAST FASTENAL CO
HSIC SCHEIN, HENRY INC
LAMR LAMAR ADVERTISING CO A
PETM PETSMART INC
WFMI WHOLE FOODS MARKET INC
PTEN PATTERSON-UTI ENERGY INC
ROST ROSS STORES INC DE
CECO CAREER EDUCATION CORP
Source: Salomon Smith Barney
Figure 2. Projected Nasdaq-100 Deletions
Ticker Company
ADCT ADC TELECOMMUNICATIONS INC
SEPR SEPRACOR INC
AMCC APPLIED MICRO CIRCUITS CORP
ITWO I2 TECHNOLOGIES INC
ABGX ABGENIX INC
RATL RATIONAL SOFTWARE CORP
SANM SANMINA-SCI CORP
PDLI PROTEIN DESIGN LABS INC
IMCL IMCLONE SYSTEMS INC
CNXT CONEXANT SYSTEMS INC
PMCS PMC-SIERRA INC
VTSS VITESSE SEMICONDUCTOR
IDTI INTEGRATED DEVICE TECHNOLOGY
CHTR CHARTER COMMUNICATIONS INC A
RFMD RF MICRO DEVICES INC
ATML ATMEL CORP
ADRX ANDRX GROUP
Source: Salomon Smith Barney |
